As Binance, the world’s largest cryptocurrency exchange, withdrew its plan to acquire its cash-strapped rival FTX in a day, the price of cryptocurrency is plunging, with Bitcoin falling below $16,000. After the plunge in the price of Terra-Luna Coin in May, there is a growing risk that the cryptocurrency industry will fall into chaos again.
Binance announced on the 9th (local time) that it would withdraw its plan to acquire FTX, which was announced the previous day. Binance explained that after conducting an asset inspection amid reports on FTX’s poor management of customer funds and the possibility of an investigation by U.S. regulators, they decided not to pursue the acquisition of the exchange FTX asked for help. There is considerable financial pressure and they have signed a non-binding investment letter of intent to protect users.
After announcing the withdrawal of Binance’s acquisition plan, Sam Bankmanfried, CEO of FTX, said in a message to employees, “Binance informed the media of the withdrawal of the acquisition plan before us,” adding, “I will do everything possible.” The Wall Street Journal reported that Bankman Fried told investors that it needed emergency funds to meet customers’ requests for withdrawal of $8 billion.
Recently, the price of FTT, a coin directly issued by FTX, plunged, raising concerns over a financial shortage of “Alameda Research,” an investment company owned by Bankman Fried, which triggered the withdrawal of funds from users of the FTX exchange. Reuters reported that the withdrawal of funds is estimated to have reached $6 billion in the three days alone since last weekend.
Bitcoin’s price fell below $16,000 in about two years in the aftermath of Binance’s withdrawal of its plan to acquire FTX. Bitcoin was traded at 15,934 dollars at 8 a.m. on the 10th, down 13% from 24 hours ago, according to the U.S. virtual asset media <Coindesque>. It is the first time since early November 2020 that Bitcoin prices have fallen below $16,000.
Ethereum’s price was also traded at the $1,120 level, down more than 15% from a day earlier. The price of FTT plunged 60 percent in 24 hours to around $2.3. This is 97% lower than the record high (about $80) recorded in early September last year.
The financial difficulties of the FTX exchange are expected to once again have a big impact on the virtual asset industry following the plunge in Terra-Luna coin prices in May. Ryan Wong, a senior researcher at Huobi, a virtual asset exchange, said, “This year is a truly shocking year for the virtual asset industry,” pointing out that the industry’s turmoil may trigger great public distrust.