The crypto market was rocked by the near collapse of FTX, one of the biggest cryptocurrency exchanges in the world. Read to know more about the ordeal.
Crypto market wobbled by FTX near collapse
On Tuesday, FTX, one of the biggest crypto exchanges in the world struck a bailout with Binance, its larger rival after a surge in withdrawals. The surge caused the exchange a “significant liquidity crunch”. Moreover, concerns about the exchange’s financial health triggered withdrawals totaling $6.2 billion withdrawals in about three days. The exchange lost about 80 percent of its value.
Binance is agreeing to buy FTX’s non-US units. The pressure on FTX came from Changpeng “CZ” Zhao, Binance’s CEO tweeting that Binance would sell its holdings of FTT. FTTs are FTX’s digital tokens. “Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books,” stated Zhao.”This afternoon, FTX asked for our help. There is a significant liquidity crunch,” he tweeted on Tuesday.
More on the crash
Binance also stated it signed a letter of intent to buy the firm. However, it also has “the discretion to pull out from the deal at any time”. “Our teams are also working on clearing out the withdraw backlog as is. This will clear out liquidity; all assets will be covered 1:1,” tweeted Sam Bankman-Fried. Bankman-Fried is the founder of FTX. “The important thing is that customers are protected… We are in the best of hands,” he added. Additionally, Bankman-Fried also added that FTX’s business in the US was a separate company. Hence, it was not “currently impacted by this” incident.
The crypto market is filled with big personalities. Bankman-Fried and Zhao are major players in the field. Additionally, since the “crypto crash” in the spring of 2022, the FTX founder became a beacon of hope to all investors. His company was thriving while several others were suffering. “More crypto exchanges will fail,” he stated and added several firms are secretly insolvent. However, due to the lack of cash reserves, FTX is joining the growing list of crypto businesses.
