Binance is said to likely back out of FTX bailout deal; bitcoin hits new two-year low

Passakorn Prothien

Binance, the world's largest cryptocurrency exchange by trading volume, will most likely withdraw from its proposed takeover of troubled rival FTX after assessing the latter's internal data and loan commitments, CoinDesk reported Wednesday, citing a person with knowledge on the matter.

The news appeared to have roiled cryptos, with bitcoin (BTC-USD) cratering 15.5% to $17.18K at around 11:00 a.m. ET, the lowest level seen since November 2020. Similarly, ethereum (ETH-USD), the largest altcoin by market cap, extended its slump and dropped 20.6% to $1.61K.

Note that Binance is still exercising its due diligence on its tentative FTX acquisition, so nothing is final. “We’re just 36 hours into the due diligence process. Once we have completed that, we will make a decision based on what’s in the best interest of Binance’s users across the globe," a Binance spokesperson told Seeking Alpha in an emailed statement. "We’ll share more information when we have a more substantive update to provide.”

Sam Bankman-Fried's FTX has taken the spotlight in recent days after rival Binance said it would offload its FTX Token (FTT-USD) holdings, the crypto issued by FTX, in a move that resulted in huge outflows from FTX. FTX's liquidity crunch created enough of a concern that it agreed to sell itself to Binance in a non-binding agreement.

Crypto-related stocks also traded in a sea of red, with the biggest losers featuring MicroStrategy (NASDAQ:MSTR) -11.8%, Coinbase Global (NASDAQ:COIN) -12.1%, Galaxy Digital (OTCPK:BRPHF) -13.3%, Riot Blockchain (NASDAQ:RIOT) -8.4%, Core Scientific (NASDAQ:CORZ) -12.1% and Bitfarms (NASDAQ:BITF) -8.3%.

Earlier, Coinbase stock slid as Daiwa removed bull rating in wake of Binance-FTX deal.