Bitcoin sank to a two-year low after Binance confirmed earlier rumors and news reports that it was ready to pull out of the FTX deal, reached between the CEOs of the two exchanges on Tuesday. The deal was pending Binance’s due diligence on FTX’s balance sheet. After an initial review, Binance said in a statement on Wednesday that it had significant concerns that convinced it to pull out of the deal. “Initially, our hope was to be able to support FTX customers in providing liquidity, but the issues are beyond our control or ability to assist,” Binance said in a statement. The price of bitcoin fell more than 13% to $15,840, according to CoinDesk, its lowest level since November 2020. It had topped $20,000 earlier in the week. The other major cryptocurrency, Ethereum, fell 13%. FTX had agreed to sell itself to Binance after experiencing the cryptocurrency equivalent of a bank. Customers left the exchange after being concerned about whether FTX had sufficient capital. The sudden sale was a shocking turn of events for Bankman-Fried, who was hailed as something of a savior earlier this year when he helped shore up a number of struggling cryptocurrency companies. FTX’s crypto token, known as FTT, fell more than 50% on reports. The coupon, now worth about $2.50, was worth 10 times that amount just a week ago. Many of the concerns of crypto investors centered on whether the balance sheet of an affiliate of FTX, known as Alameda Research, was saturated with increasingly worthless FTT tokens whose total value would not exceed the exchange’s liabilities, effectively making FTX insolvent. To further demonstrate FTX’s financial woes, Bankman-Fried asked its investors on Wednesday for $8 billion to cover withdrawal requests, the Wall Street Journal reported, citing unnamed sources. According to Bloomberg News and other media outlets, FTX is now under investigation by US authorities for how it handled customer deposits. Shares of publicly traded exchanges exposed to cryptocurrencies also took a dive on the news. Shares of Robinhood closed down about 14%, and shares of Coinbase lost about 10%. FTX is the latest cryptocurrency company this year to come under financial pressure as cryptocurrency assets have collapsed in value. Other failures include Celsius, a bank-like company that received crypto deposits in exchange for performance, as well as an Asia-based hedge fund known as Three Arrows Capital.
