Binance Quits FTX Citing Irregularities, Leaving Crypto’s Future in Limbo

FTX has always been visible and popular, mainly due to the highly optimistic crypto predictions of its CEO and founder, Sam Bankman-Fried. But recently, as FTX’s financial health declined, Binance, the world’s largest cryptocurrency exchange in terms of trades, seemed ready to help. However, on November 9, the plan changed and the company announced that it will not acquire the FTX in crisis.

Earlier this year, FTX was valued at almost $32 billion, but on Monday its tokens fell below $5 from $22, wiping out more than $2 billion in one day.

Binance pulls out of FTX deal
Despite early assurances that FTX is doing well, the cryptocurrency exchange filed for bankruptcy. (A crypto exchange monitored on a laptop with bitcoin and paper money on the keyboard; Image credit: Pexels)

The Binance and FTX Saga

When Binance seemed willing to bail out its rival, it had a detrimental effect on FTT, the native token of the FTX crypto exchange. The coin lost more than $2 billion in a space of 24 hours. Binance CEO Changpeng Zhao predicted the worst, saying that he expected the FTT to be highly volatile in the coming days.

Binance revealed that it pulled out of the deal due to “mishandling of customer funds”, which it discovered during its review of FTX’s finances. “In the beginning, our hope was to be able to help FTX clients provide liquidity,” Binance said in a tweet on Nov. 9. “But the issues are beyond our control or ability to help.”

The dissolution of the agreement leaves the future of FTX in limbo. Bankman-Fried is well known for his optimism regarding cryptocurrencies, being the largest Democrat donor and planning to donate his wealth to charity. All plans must be put on hold, as the crypto crisis has arrived for FTX, erasing his status as a billionaire. He has lost more than 94% of his fortune, in the midst of a liquidity crisis.

In a letter to investors, Bankman-Fried wrote: “I am sorry I did not do better and will do my best to protect clients’ assets and their investment.”

Previously, he had campaigned for better regulatory frameworks for digital assets.

According to a person familiar with the matter, Bankman-Fried has informed investors that the company is facing a shortfall of as much as $8 billion in withdrawal requests and is in need of emergency financing.

Crypto’s Cryptic Future

Some venture capitalists have reiterated the need for decentralization as FTX collapses. Allied Market’s research report, however, predicts that the crypto market will accelerate and be worth almost $5 billion by 2030. This change will be driven by increased transparency in global payment systems and will see rapid growth. .

Some investors believe that the regulation will help cryptocurrencies go further and mitigate the crypto crisis. But finding the right balance in which cryptocurrencies can maintain their uniqueness despite regulation can be difficult. For this reason, crypto evangelists support regulation of big businesses and crypto exchanges, over governments.

While regulation could shape the future of cryptocurrencies, the currency’s inherent volatility and the entry of big players may affect the market. On the other hand, experts are also concerned about how the regulation will affect the crypto economy in general. The number of cryptocurrencies has increased exponentially in the last two years. Furthermore, 50% of cryptocurrency owners would like to start using it to pay for online purchases.

In recent years, even institutionalized investors have ventured into cryptocurrencies. And while the anonymity and volatility of cryptocurrencies helped them thrive, they have also become their curse.

Recent predictions from experts also echo the sentiment that cryptocurrencies will gradually rise to dominate the industry. According to the Bitcoin rainbow chart, Bitcoin will hit six figures by the end of 2024. In April, the CEO of crypto lending firm Nexo, Antoni Trenchev, told CNBC that Bitcoin will top $100,000 per coin in the next few years. next 12 months. But despite the grand predictions, Bitcoin has failed to reach its all-time high of around $69,000 and continues to hover around $20,000.

As the stock market and cryptocurrency market falter, only time will tell how cryptocurrencies will fare in the future. What is undeniable is the fact that a lot of work has to be done to balance risks and rewards, and to offer security to customers.

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