Binance Pulls Out of FTX Rescue, FTX Teeters on the Edge

Rumoured FTX insolvency at the weekend developed into a liquidity crisis by Wednesday and a buyout by Binance, and now Binance has pulled out of the rescue, leaving FTX on the verge of collapse.

Binance Have Pulled Out of FTX Acquisition

In the past two days, we have reported on rumoured FTX insolvency, then the rescue of FTX by chief rival, Binance, and now another twist in the saga as Binance have pulled out of the rescue.

In a tweet on Wednesday, Binance said, “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.” They added in a further tweet, “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.”

X testing X

WELCOME BONUS - Free Share Bundle When You Invest £50! Get up to £500 cashback for investing with IG.

Invest in 15,000+ shares and ETFs. Open an account now, invest at least £50, and you’ll get a free share bundle worth between £40 and £200. T&Cs apply.

5.0

Open Account Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

FTX Teeters on The Edge of Bankruptcy,

This leaves FTX on the verge of bankruptcy. FTX customers have fled the exchange after becoming concerned about whether FTX had sufficient capital. According to the Wall Street Journal, citing a person familiar with the matter, FTX CEO Sam Bankman-Fried told investors that FTX is looking at a shortfall of up to $8 billion from withdrawal requests, which requires emergency funding.

The FTX native token has plunged further again and is now trading at only 12% of its value from a week ago.

Crypto investors’ concerns were raised by the fact that the balance sheet of sister company to FTX, Alameda Research, was full of increasingly worthless FTT tokens and whose total value would not cover the exchange’s liabilities, thereby essentially making FTX insolvent.

Cryptocurrencies Plunge

The broader cryptocurrency market saw prices for most altcoins plunge for a second straight day on Wednesday and again today in the wake of this news. Fears are for a domino effect as was seen earlier this year, with potential for further, new deleveraging ramifications across the crypto and decentralised finance space.