Bears Control Crypto Market As FTX-Binance Turmoil Frightens Investors

The cryptocurrency market witnessed a massive crash on Wednesday on the back of an unfriendly exchange between the CEOs of Binance and FTX.

On Tuesday, FTX struck a bailout deal with larger rival Binance after a surge in withdrawals caused a “significant liquidity crunch”.

Concerns about FTX’s financial health reportedly triggered $6bn (£5.2bn) of withdrawals in just three days.

Binance says it agreed to buy FTX’s non-US unit, pending due diligence.

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”.

Binance said it had signed a letter of intent to buy the firm but had “the discretion to pull out from the deal at any time”.

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 important thing is that customers are protected… We are in the best of hands,” he added.

Mr Bankman-Fried also noted that FTX’s US business was a separate company and “not currently impacted by this”.

Solana (SOL) lost 18.3 per cent to trade at $20.85, Dogecoin (DOGE) went south by 13.1 per cent to $0.0866, Ethereum (ETH) declined by 3.3 per cent to $1,303.46, Ripple (XRP) slumped by 9.4 per cent to trade at $0.388, Bitcoin (BTC) crashed by 6.0 per cent to $18,262.52, Litecoin (LTC) depreciated by 5.9 per cent to $59.19, and Cardano (ADA) dipped by 2.4 per cent to $0.3691.

However, Binance Coin (BNB) appreciated by 0.4 per cent to trade at $317.59, while Binance USD (BUSD) and the US Dollar Tether (USDT) remained unchanged at $1.00 each.