FTX on the brink of collapse after the cryptocurrency exchange ‘liquidity crisis’

The digital asset industry was shaken by the near collapse of Sam Bankman-Fried’s FTX, one of the largest cryptocurrency exchanges rescued by rival Binance, after a surge in customer withdrawals triggered a liquidity crisis. Zhao added on Twitter that FTX “has asked for our help” and that there is “a significant liquidity crisis”. Binance said it had signed the letter of intent to acquire FTX, but said it had “the discretion to withdraw from the transaction at any time”. The bailout of a major competitor to one of the largest and most famous companies in the global cryptocurrency industry has resonated all over the world. market. Bitcoin, the most actively traded token, is down 9%, while smaller coins are down more. FTX reached a value of $32 billion earlier this year and the company was backed by blue-chip investors including BlackRock, Ontario Teachers’ Pension Plan in Canada, and SoftBank. In an industry dubbed the “Wild West” by Wall Street’s top regulators, FTX was widely regarded as one of the better managed, with founder Bankman-Fried regularly lobbying lawmakers in Washington. Known for his unofficial shorts and t-shirt jerseys known as SBF, Bankman-Fried had a paper fortune estimated at $24 billion just six months ago. He is one of the most recognizable cryptocurrency players, frequently appearing at conferences interviewing people like Bill Clinton and Tony Blair. The deal with Binance ended an explosive and open debate between Bankman-Fried and Zhao, and when the world’s Binance announced that it would reduce its holdings of FTX tokens FTT, citing concerns about the financial stability of the exchange and the plunging token price, the problem with FTX was Accelerated over the weekend. Bankman-Fried responded on Monday that “competitors are targeting us with false rumors.” If he could work with Zhao “together for the ecosystem,” he added, “we would love it.” The FTX director also said, “FTX is fine. The property is fine.” Bankman-Fried promised on Tuesday that all customer assets would be dealt with “one-on-one” after the deal was settled. But on Tuesday he tweeted, “CZ has done and will continue to do an amazing job of building the global cryptocurrency ecosystem and creating a more liberal economic world.” FTX confirmed the transaction. Neither company disclosed the terms immediately, but once the transaction is complete, it will solidify Binance’s position as the largest platform for cryptocurrency trading. “This makes Zhao one of the most powerful players in crypto,” said Ilan Solot, Digital Assets Co-Director. At Marex Solutions, “Zhao’s view of the world will be far more important in terms of how Zhao wants to interact with regulators and policy makers. . . The weight of his views will be much stronger.” The recommended cryptocurrency industry has struggled over the past year, especially after the failure of the Terra and Luna tokens in May. The price of its flagship tokens, Bitcoin and Ether, plummeted, and several large companies collapsed, including lender Celsius Network and hedge fund Three Arrows Capital. After the cryptocurrency market crash this year, he helped out with insolvent companies, earning him a reputation as a gourmet in the industry. In June, the FTX Director announced a $250 million loan to the ailing cryptocurrency lender BlockFi. The loan followed further support for crypto broker Voyager Digital, which was rescued by an FTX loan worth approximately $485 million in cash and bitcoin. But Bankman-Fried’s ambitions also extended into traditional markets: his exchanges shook up Wall Street futures and stock market trading and attempted to buy a stake in retail broker Robinhood. In 2021, FTX signed a 19-year contract renaming Miami. Hit’s Basketball Stadium as FTX Arena. In 2021, Bankman-Fried said the acquisition of Goldman Sachs was “not entirely without question.”
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