Cryptocurrency Markets In Turmoil After Binance Drops Plan To Bail Out FTX

10.11.2022 - 14:47 / deadline.com

Cryptocurrency prices dropped to two-year lows overnight after major cryptocurrency exchange Binance announced late Wednesday that it was pulling out of a proposed merger with ailing rival FTX, leaving the latter on the verge of collapse.

The failure of the cryptocurrency giant could have a ripple effect on the world of sports and entertainment.

A number of companies and celebrities are reported to have hefty investments in the company, while FTX also has big-ticket sponsorship deals with the likes of the Miami Heat basketball team and the Formula One squad Mercedes-AMG Petronas F1.

Binance said in a statement that after doing due diligence it would not proceed with the deal, explaining that reports of “mishandled customer funds and alleged US agency investigations” had played a part in its decision.

News that Binance was walking away from the deal sent cryptocurrency values tumbling with benchmark cryptocurrency Bitcoin falling to a two-year low of $15.71 on Wednesday evening, against an all-time high of $64.86 in November 2021.

It slightly recovered over the course of the night and was trading at $16.29 at 6.10 am E.T. on Thursday.

The FTX Token, however, appeared to have gone into freefall trading at around $2.65 at 10.10 am E.T on Thursday, some 40% lower than at the same time the previous day, and against its historic high of $77.69 in September 2021.

FTX, which was valued at $32 billion this year by private investors, has experienced a sudden change in fortunes in recent weeks, over growing concerns about the health of the company’s balance sheet, which in turn has prompted a panicked withdrawal of funds by investors.

CEO Sam Bankman-Fried said on Tuesday that his company was facing an $8b shortfall in funds due