As a result of Binance’s decision to abandon its ambitions to acquire FTX, which was announced on Wednesday, Sam Bankman-cryptocurrency Fried’s empire is on the point of complete collapse.
This turnaround comes just one day after Binance CEO Changpeng Zhao revealed that the largest cryptocurrency company in the world has struck a preliminary agreement to buy FTX’s non-U.S. operations. businesses for an amount that has not been made public, so rescuing the company from a crisis involving its cash. At the beginning of this year, FTX received a valuation of $32 billion from private investors.
In a tweet published on Wednesday, Binance stated that their initial goal was to “be able to serve FTX’s customers in providing liquidity.” “However, we do not have any influence or power to deal with the problems.”
Sources with knowledge of the issue claim that Bankman-Fried was hurriedly seeking funding from venture capitalists and other investors before going to Binance because he was having a liquidity restriction on Monday night.
Initially, Zhao promised to take action; however, his company swiftly reversed course, claiming accusations of “mishandled customer monies and suspected investigations by U.S. agency officials.”
It is currently unknown who will be the next in line to purchase the struggling cryptocurrency exchange. According to a source acquainted with the situation, Bankman-Fried notified investors that the company is facing a shortfall of up to $8 billion from withdrawal requests and needs emergency liquidity. This information comes from a person who is familiar with the situation.
This week has been rocked by a dramatic collapse that has shaken the cryptocurrency world. The implosion of the Binance-FTX transaction is the latest chapter in this shocking collapse.
Even as recently as Monday, Bankman-Fried attempted to convince investors that the company’s assets were in good shape. But after Zhao of Binance announced in public that his company was selling its holdings in FTX’s native token FTT, the selloff got underway, and FTX was unable to stop it.
According to the reporting of Eric Newcomer, a member of the press, Sequoia Capital, one of the most important venture capital firms in Silicon Valley, invested $210 million in the company. According to Newcomer, FTX recently informed investors that it anticipates its operating income in 2022 to decrease to $144 million, down from $338 million in 2021, while sales are anticipated to increase to $1.1 billion, up from $1 billion in the previous year.
On Tuesday, Bankman-Fried reported that customers had requested withdrawals totaling $6 billion from their accounts. Additionally, he erased tweets from the previous day which indicated that FTX had sufficient assets to cover the holdings of customers.
In a memo that Zhao distributed to the employees of Binance earlier on Wednesday, he stated that he “did not master plan” the fall of FTX. He stated that the falling value of FTX is “not helpful for anyone in the industry,” and that staff should not “see it as a success for us.”
In addition to that, he instructed them to refrain from trading FTT tokens while this situation is being resolved.
“If you have a bag, you have a bag.” “DO NOT purchase or sell anything,” he wrote.
FTT had already lost 80% of its value by Tuesday, when it fell to $5, wiping away more than $2 billion in a single day. This decline occurred between Monday and Tuesday. On Wednesday, it dropped by more than half, reaching an all-time low of about $2.30. As a result, the total value of tokens in circulation is now approximately $308 million.
In the midst of the turbulence surrounding the agreement, cryptocurrency prices, led by bitcoin, have fallen, dropping another 13% on Tuesday, then falling another 15% on Wednesday. For the first time since November 2020, it is selling at a price lower than $16,000. Ether, on the other hand, has lost more than thirty percent of its value over the course of the past two days and is very close to going below one thousand dollars.
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