Crypto crash today. The crypto sector has received a big blow this week as values of cryptocurrency crashed and bitcoin is currently at 16k$. Meanwhile, the FTX exchange experienced a liquidity crunch which cost the company a major loss.
Binance had earlier agreed on a deal. A non-binding letter of intent to buy FTX after the CEO of FTX SBF had asked for help during the liquidity crunch. Things didn’t turn out well for this as Binance has scrapped this deal from the table and this is why.
According to an interview by Coindesk with a spokesman, “we have determined that we will not pursue the potential acquisition of FTX.com owing to corporate due diligence. As well as the most recent press reports alleging mismanaged customer funds and alleged U.S. agency investigations.”
“Our initial intention was to be able to assist FTX’s clients in providing liquidity, but the problems are outside of our control or realm of influence. Retail customers will suffer every time a key company in an industry falters. The crypto ecosystem has grown more resilient over the past few years, and we think that eventually, the free market will pick out outliers that abuse user funds.
According to the spokesman, the ecosystem “will strengthen as regulatory frameworks are enacted. Also as the industry continues to develop toward greater decentralization.” In response to a liquidity crisis. This was largely sparked by Binance’s declaration that it will sell off all of its holdings of FTX’s exchange token FTT. The world’s largest cryptocurrency exchange by volume, Binance, decided to assist its struggling rival. A hectic day and a half concluded with Binance pulling their offer. Trading firm Alameda Research, a sister company of FTX, owns a sizable chunk of its balance sheet assets in FTT. Refer to this post.
After learning that Binance had withdrawn from its agreement to purchase FTX. FTT which had already fallen precipitously in recent crypto crash today, fell another 32% to roughly $2.41.