Bitcoin suffered steep drops Wednesday as the stability of one of the biggest cryptocurrency companies came into question.
Bitcoin fell below $17,000 approaching noon, down a precipitous 17% from the day before.
The crypto selloff was broad-based, with digital currencies across the board tumbling in reaction to fears of contagion.
Cryptocurrency giant FTX, facing a sudden liquidity crisis, agreed to be taken over by rival Binance, although there are questions about whether the deal will actually happen, spurring further panic by traders. The deal is now seen as “highly unlikely” to go through, according to reporting by CoinDesk.
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Ethereum, the second-largest cryptocurrency by market cap, fell even more steeply than bitcoin, shedding more than 25% of its value. Ripple dropped by 20%, and Cardano slipped by more than 13%. Binance coin, used on the Binance platform, has lost more than a quarter of its value since the FTX fiasco began.
The report of the deal’s likely failure caused cryptocurrencies to fall even further as investors flee the mercurial asset class. On Wednesday, Binance said that in the “spirit of transparency,” it is publishing the actual note it sent to all global staff just hours ago.
“FTX going down is not good for anyone in the industry. Do not view it as a ‘win for us’. User confidence is severely shaken. Regulators will scrutinize exchanges even more. Licenses around the globe will be harder to get,” the CEO of Binance said in the memo.
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Additionally, the Securities and Exchange Commission as well as the Commodity Futures Trading Commission have launched investigations into FTX related to the liquidity crisis, Bloomberg reported on Wednesday morning.
Traditional stocks were also in the red on Wednesday, with the Dow Jones Industrial Average off by about 200 points.
