FTX Founder Sam Bankman-Fried lost 94% of his wealth overnight following the collapse of his crypto exchange|Cointelegraph|CC BY 3.0
A day after agreeing to take over rival FTX, Binance decided Wednesday to back out of the deal, citing “mishandled customer funds and alleged US agency investigations” swayed its decision.
Now, FTX has a shortfall of about $8 billion. It had already been struggling with an increase in withdrawals that led to a ‘liquidity crunch’.
The cryptocurrency giant canceled the deal after viewing FTX’s finances, and tweeted the issues facing FTX were “beyond our control or ability to help.”
US regulators are currently investigating if FTX was involved in mishandling customers’ funds.
Crypto assets plunged sharply following the announcement. Bitcoin dropped about 16%, the largest decline since November 2020. FTX Chief Executive Sam Bankman-Fried’s net worth plunged 94%—from $15.6 billion to less than $1 billion Tuesday.
Binance CEO Changpeng Zhao (CZ) acknowledges what happened to FTX has fractured peoples’ confidence in crypto. The decision shows a looming uncertain future for FTX as investors learn of the flip side of cryptocurrency—the lack of government backing.