Saudi Press

Saudi Arabia and the world
Friday, Mar 29, 2024

Crypto crisis deepens with values suffering after Binance U-turns on FTX bailout

Crypto crisis deepens with values suffering after Binance U-turns on FTX bailout

Regulators and US officials are reportedly investigating as the FTX exchange teeters on the brink following a rush of withdrawals that are leaving customers facing big losses.

Bitcoin hovered just above a two-year low overnight and other cryptocurrencies suffered heavy losses as FTX teetered on the brink of collapse.

It had emerged on Wednesday that the Binance exchange had walked away from a non-binding bailout offer of smaller rival FTX - once the sector's fourth-largest exchange.

Binance said: "As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX."

FTX, whose native token FTT has lost 90% of its value this week following a surge of withdrawals, was reported by the Wall Street Journal to have told investors it needed $8bn (£7bn) to cover them.

Another exchange, OKX, said it was also approached by FTX chief Sam Bankman-Fried this week, who described liabilities of $7bn that needed covering quickly.

OKX director of financial markets, Lennix Lai, told the Reuters news agency: "Even Elon Musk would not be able to commit to a deal with $7bn liability within a few hours of negotiations.

"That was too much for us."

The latest turmoil for the sector is focusing on the unknown size of customer losses and the hit to sentiment from the latest and possibly largest collapse.


Binance CEO Changpeng Zhao pulled the plug on an offer to rescue FTX after the scale of its problems became clear.

The prospect of a top exchange failing follows the collapse of stablecoin TerraUSD and crypto hedge fund Three Arrows Capital this year.

Cryptocurrency markets nursed heavy losses on Thursday, with bitcoin attempting a recovery around the $16,700 level following a 20% dip on the week.

FTT slumped just above its record low of $1.50 but was trading just above $2.

Bankman-Fried said he was "exploring all the options" but there were no signs that any other rescue had been made available.

The US securities regulator was said by Reuters to be investigating FTX.com's handling of customer funds and crypto-lending activities while a separate report, by Bloomberg, suggested the US Department of Justice was also looking in to the turmoil.

Danny Chong, CEO of decentralised finance firm Tranchess, said the problems at FTX had wider ramifications than the sector's earlier failures.

"People's funds, including market makers', are still currently with FTX.

"Just when people were thinking that crypto winter might probably not last... along comes another episode like this."

Investors are already writing off funds ploughed into FTX.

Venture capital fund Sequoia Capital wrote down a $150m exposure to zero on Wednesday.

Canada's Ontario Teachers Pension Plan, Tiger Global and Japan's Softbank are also FTX investors.

Neil Wilson, chief markets analyst at markets.com, said the crisis was being felt more widely: "Whilst crypto isn't necessarily that big a market overall, it's certainly correlated to things like risk and liquidity and therefore it's adding to a negative feeling in the market today."
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Reports in Gaza: 5 dead from the impact of aid packages dropped by the USA
Apple warns against drying iPhones with rice
China Criticizes US for Vetoing UN Ceasefire Resolution in Gaza
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
The U.S. vetoed a U.N. Security Council resolution calling for a temporary ceasefire in Gaza, instead proposing its own six-week ceasefire plan contingent upon the release of all hostages held by Hamas
Prince William Urges End to Gaza Conflict
Saudi Arabia ranks first in UN index for e-government services in MENA
Israel has gone ‘beyond self-defence’ in Gaza, says Labour’s Streeting
EU Calls for Immediate Ceasefire in Gaza Conflict
Israel Records 20% Drop In GDP, War In Gaza Is The Reason
Saudi Arabia's FDI Inflows Grow with New International Standards
Venture Capitals Power Up Across MENA Region
Saudi Arabia Introduces Terms for 30-Year Income Tax Exemption for Multinational Companies
Saudi FM: Establishing Palestinian state is only pathway for Mideast stability
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
Elon Musk's Starlink Gets License For Israel, Parts Of Gaza
Influencers Exploit X Platform for Profit Amidst Israel-Gaza Conflict
PM Modi Announces Opening Of New CBSE Office In Dubai
International Criminal Court's Chief "Deeply Concerned" By Rafah Bombing
January Funding for MENA Startups Totals $86.5 Million
Saudi Arabia accelerates digital economy growth through Nvidia partnership
Indian female military officers commend Saudi Arabia's progress and women's empowerment
Israel unveils tunnels underneath Gaza City headquarters of UN agency for Palestinian refugees
Israel deploys new military AI in Gaza war
Egypt threatens to suspend key peace treaty if Israel pushes into Gaza border town, officials say
Israel Utilizes AI Military Technology in Gaza Conflict
Saudi Arabia Warns Of A "Humanitarian Catastrophe" If Israel Moves On Rafah
China Warns Iran to Halt Houthi Attacks or Damage Trade Ties
US University To Shut Qatar Campus Due To "Heightened Mideast Instability"
Iran-backed hackers interrupt UAE TV streaming services with deepfake news
Facebook and Instagram Ban Iran's Supreme Leader
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
U.S. Secretary of State Blinken: The Israelis underwent dehumanization on 7.10, this does not give them the right to do this to others.
Defense Technology Showcase Held in Riyadh
Saudi Arabia’s non-oil exports rise 2.5% to $6bn in November 2023: GASTAT
UK Bans Misleading "Zero Emissions" Claims for Electric Cars
Gaza's Teen Inventor Sparks Light in Displacement
Netanyahu Rejects Ceasefire Proposal, Insists On Total Victory Over Hamas
Guterres appoints independent UNRWA review panel
Private Sector Employment Hits Record High with Over 11 Million Employees in January
Rolls-Royce Executive Encourages Saudi Women to Tap into Their Inner 'Superhero' for Success in Defense Industry
Saudi Arabia launches National Academy of Vehicles and Cars
Saudi Tourism Minister Reveals Plan for 250,000 New Hotel Rooms by 2030
SAR to more than double eastern network passenger capacity with new trains deal
Saudi Arabia Enhances National Defense with New Partnerships
Saudi Aramco Maintains Arab Light Crude Pricing to Asia for March
NEOM Establishes New York Office to Support Investors
Saudi Wealth Fund Draws in Over $25 Billion Worth of Investments in Three Years, Al-Rumayyan Reveals
ZATCA Cautions Against Scammer Schemes
INTRA Defense Technologies inaugurates drone factory in Riyadh
×