December 4, 2022

Taylor Daily Press

Complete News World

Cryptocurrency value in free fall after a failed transaction between Binance and FTX exchanges

Cryptocurrency value in free fall after a failed transaction between Binance and FTX exchanges

FTX suddenly faced liquidity issues this week and struck a deal with rival Binance to be acquired. It was great because Binance itself contributed to the demise of FTX. Binance has said that it wants to sell all the FTX cryptocurrencies it owns due to FTX financial problems and fears that the coins will become worthless.

In recent days, more and more questions have been raised about the takeover deal. Binance had the option to cancel the deal, which is what happened now. After reviewing FTX’s operations, “we have decided not to proceed with the acquisition of FTX.com,” according to the tweet. Due diligence will show that the debt-asset gap in FTX is likely to be in the billions of dollars. It may be more than 6 billion dollars.

The cryptocurrency trading platform also mentions press reports about FTX mishandling client funds and an investigation by the US authorities. “Initially, our hope was that we could help FTX clients provide liquidity, but the issues are beyond our control or our ability to help,” said Binance CEO Changpeng ‘CZ’ Zhao. The future of FTX.com is now uncertain, and the exchange will urgently need $8 billion in cash.

“All hell breaks out”

In the meantime, users are turning away from the stock market en masse. The uncertainty has caused the prices of various cryptocurrencies to crash in recent days. Bitcoin already lost nearly 15 percent of its value on Tuesday, dropping below $17,500. A day later, it dropped just a little below $17,000, before dropping further to $16,600 by Thursday morning. At its peak, exactly one year ago, a single bitcoin was worth over $64,000. Other coins like Ethereum, XRP and dogecoin also lost a lot.

Observers view the development with alarm. “Markets are now in a complete panic,” John de Witt, chief investor at crypto asset manager Zerocap told the Financial Times. “Hell breaks out.” According to JP Morgen, the massive sell-off that is taking place now is “more problematic than before as the number of entities with stronger balance sheets that can bail out other entities with lower capitalization) declines.

The Financial Times also reported that investment fund Sequoia Capital on Wednesday night sent a letter to its investors that it had reduced its stake in FTX to zero. Last year, the fund invested $213 million in FTX, while the company was then valued at at least $25 billion.

It is not just the uncertainty caused by another scandal that deters crypto investors. Concerns about excessive market concentration also play a role in this. If FTX had already been acquired by Binance, this party would have turned out to be a very big player. One of the basic ideas of cryptocurrencies is precisely the decentralized structure in which no party is given much power.

Biggest cipher loss ever

Crypto billionaire Sam Bankman Fried, CEO of FTX, is also disappointed by the failed deal: he lost nearly 15 billion euros of his assets in one day, the largest crypto loss ever.

Earlier this week, Bankman-Fried’s net worth was around €16 billion. However, after FTX’s liquidity issues and a potential sale to Binance, he saw his fortune dwindle as the value of the FTX coin fell by more than 75 percent. Suddenly, his net worth only reached a billion dollars.

See also  New virus steals encrypted wallet passwords via YouTube