The digital assets market has been rocked by the near-collapse of one of the world’s biggest cryptocurrency exchanges, FTX.
On Tuesday, FTX struck a bailout deal with larger rival Binance after a surge in withdrawals triggered a “significant liquidity crunch”.
Concerns about FTX’s financial health reportedly triggered $6bn (£5.2bn) of withdrawals in just three days.
Under a non-binding agreement, Binance will buy FTX’s non-US unit.
FTX’s founder Sam Bankman-Fried and Binance’s chief executive Changpeng “CZ” Zhao are two of the most powerful people in the cryptocurrency market and high-profile rivals.
The pressure on FTX came in part from Mr. Zhao, who tweeted on Sunday that Binance would sell its holdings of FTX’s digital token, known as FTT.
“Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books,” he said. FTT has lost almost 80% of its value this week.
On Tuesday Mr. Zhao tweeted, “This afternoon, FTX asked for our help. There is a significant liquidity crunch”.
Also on Twitter Mr. Bankman-Fried said: “Our teams are working on clearing out the withdraw backlog as is. This will clear out liquidity; all assets will be covered 1:1.”
The news sent shockwaves through the digital assets market, with cryptocurrencies falling sharply.
Bitcoin fell by more than 10% to hit the lowest level since November
2020.
Meanwhile, online trading platform Robinhood lost more than 19% of its stock market value, while cryptocurrency exchange Coinbase fell by 10%.
Source-BBC
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