Crypto Prices Crash As FTX Crypto Exchange Collapses – What We Know So Far
The price of almost all major cryptocurrencies crashed today after it was announced that major crypto exchange FTX will be acquired by rival Binance in a strange twist.
The world’s largest cryptocurrency has lost more than 8% in value over the past 24 hours and is currently trading around $18,000. Ethereum, the second largest crypto, also fell by more than 16% to $1,200. Polygon’s Matic has suffered the most among the top ten, losing around 20% in the last 24 hours.
Commenting on Cryptonews.com, Bitfinex market analysts said that the recent developments in the crypto space will further exacerbate sentiment around Bitcoin which was already in the crosshairs of whipsaw trading.
“In a space hit by a wave of high-profile failures this year, markets are likely to remain turbulent until traders steady their nerves. A backdrop of looming interest rate hikes and a worsening global economy only adds to super bearish sentiment,” the analysts said.
How King of Bailouts FTX Fell
FTX earned a reputation as crypto’s bail-out king during the recent crypto meltdown. The platform generously offered to bail out some troubled digital currency platforms, offering millions of dollars in a revolving line of credit.
But in a strange twist, the stock exchange became insolvent and had to sell its distressed assets to a competitor. “We have reached agreement on a strategic transaction with Binance for FTX.com,” FTX CEO Sam Bankman-Fried said in a tweet.
Binance CEO CZ added more details. “FTX asked for our help. There is a significant liquidity crisis. To protect users, we signed a non-binding LOI, with the intention of fully acquiring FTX.com,” he said. But how did things get there?
On November 2nd, CoinDesk reported that it has gained access to Alameda Research’s balance sheet, claiming that the balance sheet was loaded with the exchange’s native exchange token FTT.
Later, Binance CEO Changpeng Zhao announced that the exchange, which held 23 million FTX tokens worth around $529 million at the time, has decided to liquidate the remaining FTT on its books.
The news caused FTT selling pressure to increase, with the coin plunging to as low as $3 from its daily high of $22 after it was revealed that Binance would buy the exchange.
“Fears that Alameda’s poor balance sheet was mixed with FTX led to a liquidity crisis and ultimately to today’s offer by CZ to buy the exchange,” said crypto veteran Jonathon Wu, adding that there is “an apparent multi-billion dollar hole on FTX .”
