Cryptocurrency prices fall as Binance opts against buying rival FTX - CBS News

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November 9, 2022 / 5:32 PM / CBS/AP
Cryptocurrency prices plunged for a second-straight day on Wednesday after crypto exchange Binance announced it was pulling out of its deal to purchase its failing rival FTX Trading.
Bitcoin and other cryptocurrencies were broadly lower soon after investors heard rumors that the Binance-FTX deal was in trouble. The CEOs of both exchanges — Sam Bankman-Fried of FTX and Changpeng Zhao of Binance — had publicly agreed to a merger Tuesday, pending the ability for Binance to perform due diligence of FTX’s balance sheet.
That due diligence led to significant concerns that convinced Binance to pull out of the deal, the company said in a statement Wednesday.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” said Binance, the world’s largest cryptocurrency exchange.
In the spirit of transparency, might as well share the actual note, sent to all Binance team globally a few hours ago.https://t.co/IUNkPcLC8T pic.twitter.com/XGlIJB7EV5
The price of Bitcoin plunged more than 12% to $16,084, according to CoinDesk, its lowest level since December 2020. It had been above $20,000 earlier in the week. The other major cryptocurrency, Ethereum, was down 13%.
FTX had agreed to sell itself to Binance after experiencing the cryptocurrency equivalent of a bank run. Customers fled the exchange after becoming concerned about whether FTX had sufficient capital. The sudden sale was a shocking turn of events for Bankman-Fried, who was hailed as somewhat of a savior earlier this year when he helped shore up a number of cryptocurrency companies that ran into financial trouble.
Zhao, who goes by “CZ” in the crypto world, posted a lengthy statement on Twitter addressing rumors about the Binance-FTX deal falling apart.
“One, we did not master plan this or anything related to it. It was less than 24 hours ago that SBF called me,” Zhao said, referring to Bankman-Fried. “And before that, I had very little knowledge of the internal state of things at FTX. I could do some mental calculations with our revenues to guess theirs, but it would never be very accurate.”
Shares of publicly traded exchanges exposed to crypto also declined on the news. Robinhood shares closed down roughly 14%, and Coinbase’s stock lost around 10%.
FTX is the latest cryptocurrency company this year to come under financial pressure as crypto assets have slumped in value. Other failures include Celsius, a bank-like company that took in crypto deposits in exchange for yield, as well as an Asia-based hedge fund known as Three Arrows Capital.
First published on November 9, 2022 / 5:32 PM
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