scorecardresearchCryptocurrencies crash after Binance announces takeover of crypto exchange

Cryptocurrencies crash after Binance announces takeover of crypto exchange FTX

Updated: 10 Nov 2022, 12:35 AM IST

As the news of FTX’s crash spread across the crypto universe, there was a mad rush to sell cryptocurrencies across the board, thus bringing down the prices of bitcoin, Ethereum, ripple, dogecoin, among others

Bitcoin trades around $18,326 on Wednesday.

Bitcoin trades around $18,326 on Wednesday.

After the takeover of FTX exchange by Binance, cryptocurrency prices have dropped across the board. Bahamian crypto exchange FTX faced a severe liquidity crunch following which it consented to be acquired by Binance, which happens to be the largest exchange in the world in terms of daily trading volume.

As the news of crash of FTX spread across the crypto universe, a rush to sell cryptocurrencies followed, thus bringing the crypto prices down.

Binance CEO Changpeng Zhao on Tuesday announced that a provisional agreement was signed to acquire the battered exchange FTX following the concerns around its insolvency, triggered by a slowdown in withdrawals and drop in the price of FTX’s native token.

The FTX CEO Sam Bankman-Fried lost an estimated $14.6 billion dollars – i.e., nearly 94 percent of his total wealth, the Bloomberg Billionaire Index shows.

Sam Bankman-Fried tweeted this on Tuesday.

“Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc — we apologise for that,” said Sam Bankman-Fried in one of his tweets.

As a result of a new crash of a crypto institution, Bitcoin prices have fallen by over 7 percent in the global markets to trade around $18,318 per unit, ethereum dropped by around 12.5 percent to trade around $1,292, Cardano fell by 2.65 percent to trade at $0.374. 

Dogecoin fell by 13.90 percent to trade at $0.088, polygon fell by 15 percent to trade at $0.975 and polkadot dropped by 4.97 percent to trade at $6.29 and Chainlink fell by 14.8 percent to trade at $7.20, as per CoinDesk data on 7.20 GMT.

The development had left crypto investors in utter shock. The sudden collapse of his crown jewel, which now needs a bailout from chief rival, Binance – has left crypto investors in stunned disbelief, Bloomberg reported.

"The market has already witnessed crypto's failure to deliver on its promise, and now industry titans tumbling like dominoes will damage the public’s faith in "magic internet money” and “companies” selling crypto dream. The "bank run" caused by the panic liquidation of FTT tokens by their largest holder highlights lack of transparency in blockchain industry. The transparent feature of blockchain should have been employed first by crypto industry participants to generate confidence, but the over-leveraged and, opaque nature have led to the deepening of the industry crisis, and there will be no sunlight in crypto winter for long time," said Gaurav Mehta, Founder, Catax - Simple Crypto Taxes.

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First Published: 09 Nov 2022, 02:05 PM IST