That The cryptocurrency market has been dogged by problems in the past 12 monthsThe latest appears to be the impending collapse of one of the largest cryptocurrency exchanges FTX after a buyout deal with larger competitor Binance appears to be over.
The proposed agreement between FTX CEO Sam Bankman-Fried and rival Binance CEO Changpeng Zhao at Binance had to solve a serious liquidity crisis at FTX. Investors have not been able to receive withdrawals since Tuesday.
Bankman-Fried originally had tweeted that “all assets will be covered 1:1,” by the buyout. Now it doesn’t go any further it seems there is little chance of meeting the $7 billion payout requests,
A notice on their website said, “FTX is currently unable to process withdrawals. We strongly advise against depositing.”
Lennix Lai, Director of Financial Markets at OKX, said“If FTX doesn’t get an immediate cash injection, they would go bankrupt.”
On Tuesday, FTX’s value fell by 72% as Binance liquidated its holdings in FTX’s native cryptocurrency the pole. ONE leaked balance from CoinDesk suggested that much of the money behind FTX and affiliates was held in this native currency; the mass sell-off by Binance could have played a role in the collapse in its value.
Reuters reported that the US Securities and Exchange Commission (SEC) was investigating FTX for potentially mishandling client funds as well as resisting them.
Binance said in a statement published on Twitter that the problems with FTX were “beyond our control or ability to assist”.
How will this affect the cryptocurrency market?
After a boom back in November 2021, the crypto market entered a six-month crisis. This was epitomized by the value of the crypto market will fall from a peak of more than $3 trillion on November 10, 2021 to $843 billion on July 6, 2022Since then there has been a slight recovery, but at present there are no signs that the market will return to the top.
April Joyner, a correspondent for Business Insider in New York, told the BBC that the collapse of FTX would put many people’s investments at risk.
“If FTX were to go under, a lot of people could potentially lose their money depending on what goes on there,” she said, “it’s also led to a lot of turmoil in the crypto markets – We’ve seen the prices of Bitcoin, Ethereum, etc. fall, and so there’s a lot of concern and worry around the crypto markets right now.”
Immediately after the FTX news the price of Bitcoin fell from around $20,000 to less than $16,000This time last year, Bitcoin was worth four times what it is today.