Pile of cryptocurrency coins
gopixa / iStockphoto.com

Cryptocurrency prices plunged for a second-straight day Wednesday after crypto exchange Binance announced it was pulling out of its deal to purchase its failing rival FTX Trading.

Bitcoin and other cryptocurrencies were broadly lower on rumors and news reports that the Binance-FTX deal was in trouble. The CEOs of the two exchanges — Sam Bankman-Freid of FTX and Changpeng Zhao of Binance — had publicly agreed to a merger Tuesday, pending the ability for Binance to perform due diligence of FTX’s balance sheet.

That due diligence apparently led to significant concerns that convinced it to pull out of the deal, Binance said in a statement Wednesday.

“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said.

The price of Bitcoin plunged more than 12% to $16,084, according to CoinDesk, its lowest level since December 2020. It had been above $20,000 earlier in the week. The other major cryptocurrency, Ethereum, was down 13%.

FTX had agreed to sell itself to Binance after experiencing the cryptocurrency equivalent of a bank run. Customers fled the exchange after becoming concerned about whether FTX had sufficient capital. The sudden sale was a shocking turn of events for Bankman-Fried, who was hailed as somewhat of a savior earlier this year when he helped shore up a number of cryptocurrency companies that ran into financial trouble.

Shares of publicly traded exchanges exposed to crypto also plunged on the news. Robinhood shares closed down roughly 14% and Coinbase shares lost around 10%.

FTX is the latest cryptocurrency company this year to come under financial pressure as crypto assets have collapsed in value. Other failures include Celsius, a bank-like company that took in crypto deposits in exchange for yield, as well as an Asia-based hedge fund known as Three Arrows Capital.