Binance withdraws from helping FTX crypto exchange is on the verge of collapse


Sam Bankman-crypto Fried's empire is on the verge of disintegrating as a result of Binance withdrawing from its intentions to buy FTX, the business said on Wednesday. 

  • Binance said on Wednesday that it is abandoning its ambitions to buy FTX.
  • The problems are beyond our power to resolve or control, Binance tweeted.
  • The valuation of FTX, which was $32 billion early this year, is now in danger of failing.

The decision to reverse course was made just one day after Binance CEO Changpeng Zhao revealed that his company and the largest cryptocurrency company in the world had reached a non-binding agreement to purchase FTX's non-U.S.Private investors put FTX's worth at $32 billion earlier this year.

In the beginning, Binance remarked in a tweet, "Our objective was to be able to serve FTX's clients to offer liquidity." But we are unable to intervene or control the problems.

People with knowledge of the matter claim that on Monday night before going to Binance, Bankman-Fried was scrambling to raise money from venture capitalists and other investors because to a liquidity crisis. Zhao originally consented to help, but his business swiftly changed its mind, citing accusations of "mishandled customer monies and purported U.S. government investigations."

Unknown parties are in position to acquire the problematic bitcoin exchange. According to a person acquainted with the situation, Bankman-Fried informed investors that the firm is in need of emergency finance due to a shortfall of up to $8 billion caused by withdrawal demands.

The most recent incident in a dramatic collapse that has rocked the cryptocurrency ecosystem this week is the failure of the Binance-FTX transaction. Bankman-Fried tried to persuade investors that the company's assets were secure only on Monday. However, the sell-off started after Binance's Zhao announced publicly that his business was selling its holdings in FTX's native token FTT, and FTX was unable to stop it.

According to independent writer Eric Newcomer, Sequoia Capital, one of Silicon Valley's most well-known VC companies, invested $210 million in the business. According to Newcomer, FTX recently informed investors that while sales was anticipated to increase to $1.1 billion from $1 billion last year, operating income was anticipated to decline to $144 million this year from $338 million in 2021.

Consumer withdrawal requests totaling $6 billion were submitted, according to a report published on Tuesday by Bankman-Fried. He also deleted tweets from the previous day that claimed FTX had enough money to secure its clients' shares.

Zhao said in a message to Binance staff earlier on Wednesday that he "did not master plan" FTX's demise.

FTT has lost 80% of its value between Monday and Tuesday, falling to $5 and wiping out more over $2 billion in a single day. The market value of all the tokens in circulation plummeted to approximately $308 million on Wednesday after dropping by more than half to about $2.30.
Cryptocurrency prices have fallen amid the deal instability, with bitcoin falling 15% on Wednesday after falling 13% on Tuesday. It is selling under $16,000 for the first time since November 2020. On the other hand, ether has lost more than 30% of its value in the previous two days and is about to go below $1,000.

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