There was a breath of relief in the crypto space on Tuesday when a report came out that Binance was willing to acquire FTX amid their brewing war.
Little did we know that the positive atmosphere was going to be short-lived as negative updates in quick succession sent the market tumbling, with bitcoin, FTT and virtually all digital assets crashing heavily on Wednesday.
Binance no longer acquiring FTX
After announcing earlier on Tuesday of its decision to acquire the embattled rival crypto exchange, Binance disclosed that it will walk away from the deal after going through FTX’s financials and structure.
Via its official Twitter handle, Binance claims that regulatory pressure and other factors impacted their decision. It claimed that the company reviewed FTX’s books and decided to walk out of their non-binding agreement. The exchange said:
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.”
Binance, the biggest crypto exchange by trading volume, explained that it was willing to support the embattled exchange by providing its customers with liquidity; however, issues were “beyond our control or ability to help.” The firm also said, “Every time a major player in an industry fails, retail consumers will suffer,” while adding that the ecosystem will eventually become more resilient with the weeding out of bad players.
There are also rumors that FTX’s balance sheet hole could be as large as $6 billion.
FTX and Alameda Research websites are down
Websites linked to crypto exchange FTX have been taken down on Wednesday night following a liquidity crisis and takeover upheaval.
There is also an unconfirmed report that most of the company’s legal and compliance staff have called it quits
Crypto market crash
Bitcoin and all altcoins collapsed following the news that Binance declined to purchase FTX. The update sent Bitcoin to a new yearly low, declining to $15,600 before recovering to $16,200 at press time, losing 11% of market value in the last one day, according to Coinmarketcap data.
The platform’s native token, $FTT took a staggering hit after the announcement and is now trading well into the single digits. it’s currently changing hands for $2.7, down around 80% over the past 48 hours. Note that it was still trading at $22-$25 dollar early Tuesday.
Overall, the market saw a huge crypto loss in the last 24 hours. According to CoinMarketCap statistics, more than $100 billion worth of value was wiped out from crypto assets due to the price drop. Compared to the total crypto market capitalization of $935 billion 24 hours ago, the market cap is currently at $819 billion, effectively erasing $116 billion in one day.
Notably, investors had pinned their hopes on a rather swift market rebound if Binance was successfully able to acquire FTX, but now that the deal is scuppered, the troubles continue to negatively impact investor sentiment.
After the downturn caused by the FTX meltdown, the cryptocurrency market is in an uncertain situation. In view of this the industry faces a tough time ahead with potentially increased legal troubles and regulatory scrutiny across jurisdictions.
Additionally the crypto market could face a deeper collapse if it becomes clearer that FTX is now insolvent.
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