FTX: Binance backs out of FTX bailout; investors lose more than $180 billion

Synopsis

Binance has scrapped its letter of intent to buy rival crypto exchange FTX after due diligence. Furthermore, there are several reports that FTX mishandled customer funds.

New Delhi: The crypto market continued to be under stress after Binance backed out from purchasing out its arch-rival FTX trading, citing finances, investigation concerns.

Binance has scrapped its letter of intent to buy rival crypto exchange FTX after due diligence. Furthermore, there are several reports that FTX mishandled customer funds.

Earlier, FTX had agreed to sell itself to Binance after experiencing the cryptocurrency equivalent of a bank run. Customers fled the exchange after becoming concerned about whether FTX had sufficient capital.

Ashish Singhal, Co-founder and CEO, CoinSwitch, said that the market is experiencing turbulence as the international exchange FTX appears to be in trouble.

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View Details »The FTX collapse has wiped out over $180 billion from the crypto market as digital assets across the board are under tremendous selling pressure.

Shivam Thakral, CEO of BuyUcoin, India’s second longest-running crypto exchange, said that Binance has backed out of the deal to acquire FTX, which is driving investors away from riskier assets.

“Feedback from retail/institutional investors on withdrawals of their funds from FTX will play a crucial role for market recovery in the coming weeks,” he added.

Following this, crypto market saw another bout of a steep sell-off adding more to pain to the already wounded crypto market. Major crypto tokens were in deep red on Thursday.

The total crypto markets slipped below $850 billion markets, dropping another 5%. However, trading volumes in the crypto remained firm at around $190 billion, dropping marginally in the last 24 hours.

Bitcoin slipped below $16,000 during the early trading hours in India, recovering to $16,700 at 15.00 hours IST. Ethereum also breached the $1,100 mark once again before hovering around $1,200.

FTX Token or FTT, the native token of FTX, has lost 90% of its value in less than 72 hours. Solana plunged 35% in the last 24 hours. KAVA, THORchain, Curva DAO Token tumbled 12-18% each.

Irresponsible risks can be costly, Singhal said. “Do not use customer assets to borrow or deposit it elsewhere to earn interest without their knowledge and consent. When all goes smoothly, this may look smart and can help you grow fast.”

This market-wide volatility could have been avoided had the exchange, and trading firm involved done their fiduciary duties responsibly. Don’t mishandle customer assets. Risk management is not meant to be exciting, Singhal added.

Source

Updated: 11/10/2022 — 13:00