Cryptocurrency markets in turmoil after Binance drops plan to bail out FTX – Deadline

Cryptocurrency prices dropped to two-year lows overnight after major cryptocurrency exchange Binance announced late Wednesday that it was pulling out of a proposed merger with ailing rival FTX, leaving the latter on the verge of collapse.

The failure of the cryptocurrency giant could have a ripple effect on the world of sports and entertainment.

A number of companies and celebrities are reported to have hefty investments in the company, while FTX also has big-ticket sponsorship deals with the likes of the Miami Heat basketball team and the Formula One squad Mercedes-AMG Petronas F1.

Binance said in a statement that after doing due diligence it would not proceed with the deal, explaining that reports of “mishandled customer funds and alleged US agency investigations” had played a part in its decision.

News that Binance was walking away from the deal sent cryptocurrency values tumbling with benchmark cryptocurrency Bitcoin falling to a two-year low of $15.71 on Wednesday evening, against an all-time high of $64.86 in November 2021.

It slightly recovered over the course of the night and was trading at $16.29 at 6.10 am E.T. on Thursday.

The FTX Token, however, appeared to have gone into freefall trading at around $2.65 at 10.10 am E.T on Thursday, some 40% lower than at the same time the previous day, and against its historic high of $77.69 in September 2021.

FTX, which was valued at $32 billion this year by private investors, has experienced a sudden change in fortunes in recent weeks, over growing concerns about the health of the company’s balance sheet, which in turn has prompted a panicked withdrawal of funds by investors.

CEO Sam Bankman-Fried said on Tuesday that his company was facing an $8b shortfall in funds due to the sudden “run” on the exchange.

It is not currently clear how this hole will now be filled and cryptocurrency experts around the world are predicting a rocky ride for cryptocurrencies in the days and weeks to come.