Earlier this week, Bitcoin hit a two-year low, falling below $16,000 for the first time since 2020. This is down to Binance pulling out of a deal to buy the struggling exchange platform, FTX.
FTX is an exchange used to buy and sell digital tokens. It has been struggling for some and had previously made a deal with its larger rival, Binance. However, the deal has been scrapped over concerns about “due diligence”.
The company said reports of “mishandled customer funds and alleged US agency investigations” had influenced its decision not to buy the struggling platform.
A report by Reuters found that FTX was being investigated by the US Securities and Exchange Commission (SEC) over its crypto-lending activities and the way it handles customer funds. The regulator is looking into whether the platform broke laws with how it handled customer assets.
When commenting on the decision, Binance said in a statement posted on Twitter that FTX’s problems are “beyond our control or ability to help”.
It added: “Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.”
This decision has affected investor confidence and triggered large withdrawals. There was $6 billion worth of crypto withdrawals made in a three-day period, and FTX is advising customers not to make any deposits at the moment.
The exchange platform recently reopened for withdrawals for some users and according to a report by Coindesk, a total of $6.8 million was withdrawn in the first hour. One user was able to withdraw $2.6 million worth of ether (ETH) while another was able to get $1.3 million of USDC out of the exchange.
There are fears that if FTX goes bust, there could be further crypto market volatility.