Binance pulls out of the FTX acquisition. The crypto market fell, its cap dipped by over $100 billion in 24 hours following the news.
Binance tweeted about the decision to cancel the FTX acquisition. The reasons behind it were reports regarding mishandled customer funds and alleged U.S. agency investigations. Details were revealed during corporate due diligence.
Right after Binance’s statement, the websites of Alameda Research and FTX Ventures became inaccessible. Later, FTX’s website was unavailable for over a two-hour period. Once it returned online, all pages reported that withdrawals were suspended, and the service “strongly advises against depositing.” Meanwhile, the FTT token went down by nearly 90%.
The Wall Street Journal reports, citing verified sources, that Sam Bankman-Fried has reached out to investors for help, requesting emergency funding of $8 billion, which should be enough to cover the liquidity gap caused by active withdrawals from the exchange.
Large companies reported problems when trying to withdraw funds from FTX. Galaxy Digital said it has $76.8 million in FTX accounts, and $47.5 million is currently in the withdrawal process. Major investors began to dump riskier assets. For example, Sequoia Capital marked down to zero its investments in FTX and its subsidiaries, finding them completely unprofitable. The amount repaid was $213.5 million.
The cryptocurrency market reacted by plunging. As of 9:30 (GMT+2) on November 10, the vast majority of assets from the top 100 are in the red zone. The crypto market cap momentarily declined to $786 billion, according to CoinMarketCap. But it has rebounded to just over $50 billion by now.
Bitcoin dropped to $15,663, CoinGecko reported. Glassnode analysts said market participants were selling BTC with an average loss of 10%, indicating a massive sell-off. A similar situation was observed in other assets, but Solana, whose tokens appear in the investment portfolio of Alameda Research, suffered the most among others. According to DefiLlama, the total amount of blocked funds in the accounts of DeFi protocols in Solana dropped by 30% during the day. SOL lost nearly 40% of its value.
During the week, rumors about FTX’s liquidity crunch spread the web, provoking massive withdrawals from the platform and asset sell-offs. On this background, a real liquidity crisis occurred, followed by the information about FTX’s possible acquisition by Binance. However, it didn’t stop the market decline, and the deal’s cancellation only intensified the process.
