The consequences of Binance’s acquisition of FTX shook the crypto market in general, and FTX-backed crypto in particular.
The crypto market is grappling with the possibility that FTX’s acquisition by Binance may render Sam Bankman-exchange Fried’s and its close collaborator, Alameda Research, insolvent.
Following the recent news of Binance’s acquisition of FTX, the market has plummeted.
At the time of writing, BTC is down 10.85% and selling for around $18,300, putting it at the same price level as it was at the start of the summer; it has already threatened to breach the range to the downside. Meanwhile, Ethereum has dropped 15.37% to $1,320.
The violent price action is the result of FTX’s recent revelation that the exchange was having a liquidity crisis: the insolvency was so severe that Sam Bankman-Fried, the company’s CEO, agreed to sell FTX to rival cryptocurrency exchange Binance for an unknown sum.
While the acquisition is certainly welcome news for FTX users who are concerned about their funds being frozen on the exchange, it also implies that FTX and quantitative trading firm Alameda Research are unlikely to meet their debt obligations if their creditors call in their loans.
As a result, various crypto coins related to FTX and Alameda have plummeted, with FTT (FTX’s native token) leading the way.
At the time of writing, the token is down 80% and selling at $4.5, a significant decrease since Alameda CEO Caroline Ellison pledged to assist Binance in dump its FTT hoard for $22 only two days ago.
After being highly backed by Bankman-Fried up until now, SOL and other important Solana-based coins such as SRM are down 21% and 25%, respectively.
Meanwhile, despite being supposed to always maintain a 1:1 parity with the US dollar, Binance’s own stablecoin, BUSD, has risen to trade at $1.01.
BNB, Binance’s native cryptocurrency, is also doing well given the conditions, falling only 6.8%. Previously, the coin gained 24% on reports that Binance was acquiring FTX.