Crypto plunges as rescue of stricken exchange FTX is thrown into doubt by gaping hole in its accounts
Cryptocurrencies crashed to two-year lows yesterday as the rescue of stricken exchange FTX was thrown into doubt by a gaping hole in its accounts.
Bitcoin – the world’s biggest digital currency – fell around 10 per cent to below $17,000. That was the lowest level for two years and down from a peak of close to $70,000 just 12 months ago.
The latest slump came as the rescue of FTX by larger rival Binance looked set to collapse.
Crypto crash: Bitcoin fell around 10% to below $17,000. That was the lowest level for two years and down from a peak of close to $70,000 just 12 months ago
FTX struck a deal earlier this week to be bailed out by Binance, run by entrepreneur Changpeng Zhao, who prefers to be known as CZ.
But just hours into its due diligence checks, Binance experts found there was a chasm between FTX’s assets and its liabilities, or what it owes.
Sources told Bloomberg that this hole was possibly more than £5billion.
A spokesman for Binance said the firm was still in the early stage of due diligence.
The letter of intent Binance signed to take over FTX allows it to walk away at any time.
Cryptocurrency exchanges, such as Binance and FTX, are online platforms that allow users to swap money for digital tokens such as bitcoin or ethereum and trade them with other users.
But they have drawn intense regulatory scrutiny as critics claim they are being used to launder criminal cash, and are luring in investors who do not understand the risk that cryptocurrencies can tumble in value.
Ethereum is down 12.7 per cent, taking losses this year to 49 per cent.