Breaking News: Crypto Prices Spike then Crash as Binance Moves to Acquire FTX
Binance is set to acquire FTX – that is the startling news that hit the cryptoverse moments ago.
Changpeng Zhao – or CZ as he is known – tweeted that Binance has been asked for help by FTX as it seeks to staunch the bleeding at the exchange after Coindesk caught sight of documents earlier this week that indicated that sister company Alameda held the FTT token and not much else on its balance sheet.
Fears that FTX was insolvent started to swirl.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.— CZ 🔶 Binance (@cz_binance) November 8, 2022
Binance made it known that it intended to sell its holding of FTT, although claimed that the move was not related to the balance sheet issues.
That started an old-fashioned run on the exchange, with the price of the FTT token plummeting.
Earlier today the FTX Token was trading at $14.58, down 30%.
Now, after a brief rally following the news, FTT has continued its decline, down more than 57% on the day with the token now trading below the $10 mark.
Sam Bankman-Fried, owner of FTX and Alameda, initially pushed back against claims that FTX was insolvent. On 7 November, he tweeted:https://www.twitter.com/SBF_FTX/status/1589598284322328579
That was followed by Alameda CEO Caroline Ellison, saying that the firm would take the FTX tokens off Binance’s hands for $22 a piece.
@cz_binance if you're looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22!— Caroline (@carolinecapital) November 6, 2022
However, that attempt to put a floor under the price failed, when the price sank below that offer price today.
That seems to have led to a cash crunch at the SBF empire, forcing the founder to reach out to the rival exchange for help, if CZ’s tweet is a correct rendering of the latest developments.
Whatever the exact truth of the matter, the CZ tweet led to a sharp reversal in crypto prices, however, this was short-lived and prices continued selling off again.
Bitcoin and Ethereum record substantial losses
At the time of writing, Bitcoin is down 9.1% to trade at $18,959, and Ethereum is following suit losing over 12% in value since yesterday.
BNB, unsurprisingly, is the main beneficiary. The exchange coin is up 0.5% at $336 while the vast majority of altcoins sell-off.
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