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FTX’s valuation tanks as Binance abandons the acquisition deal.
Bloomberg’s wealth index now believes FTX to be worthless, as Binance has announced its decision to pull out of the acquisition deal.
Per the report, the company’s collapse will likely wipe out all investors. Consequently, the software, data, and media company estimates that FTX is worth $1 from a whopping $32 billion. Notably, Bloomberg gives the same valuation to Alameda Research, the company identified as the root of FTX’s woes.
Unsurprisingly, FTX chief Sam Bankman-Fried (SBF) is not left unscathed. With the new valuation, the crypto billionaire has lost 94% of his wealth in a single day, the most the wealth index has ever tracked in 24 hours. The index estimates that SBF has lost about $14.6 billion, leaving him with a valuation of $1 billion.
The new valuations come as Binance announced yesterday that it was pulling out of the deal, citing corporate due diligence and reports of mounting investigations. The move confirmed sentiments that were making the rounds yesterday that the deal was no longer in Binance’s best interests.
Consequently, FTX, the erstwhile leading crypto exchange, looks to be on the brink of bankruptcy, a separate Bloomberg report says, citing sources close to the matter. According to the story, SBF has told investors that the exchange needs to raise $4 billion to stay afloat.
The FTX debacle, like others in the crypto industry this year, is happening fast and hard. The company’s woes started last week when a CoinDesk report citing a leaked Alameda Research balance sheet raised concerns over the fact that the company held a lot of its assets in FTT, an illiquid token minted by FTX.
Notably, a follow-up report by Dirty Bubble Media asserted that FTX employed the same practices that sent Celsius under. However, many point to the news of Binance’s plan to liquidate its FTT holdings as the wind that brought down SBF’s house of cards, triggering a bank run that has exposed the dire state of FTX’s finances, with sources claiming the hole in the exchange’s balance sheet exceeds $6 billion, per Bloomberg.
It all comes less than three days after the FTX chief gave assurances that the exchange and its assets are fine in now-deleted tweets.
As noted by one user, the prospect of FTX’s bankruptcy does not bode well for people who held assets on the exchange.
Meanwhile, pundits have noted that the crypto industry should be more worried about the Alameda Research collapse. Notably, the company invested in several crypto projects and received several investments from traditional finance. The contagion risk could be catastrophic, as CryptoQuant chief asserts it is bigger than Three Arrows Capital.