Shares of fintech leader Block (SQ -0.06%) are tumbling 7.3% at 10:44 a.m. ET on Wednesday amid the fallout over the collapse of the FTX Token (FTT -0.50%) cryptocurrency exchange and its subsequent proposed buyout by rival Binance.
Block has tethered itself to Bitcoin (BTC -0.33%) as it wades deep into crypto, and owns $156 million worth as of the end of the third quarter. Anything with even a tangential relationship to the crypto space is being brought down today.
FTX Token was the subject of an analysis by CoinDesk, which indicated that a large portion of the exchange's asset base was comprised of the FTX token, FTT. This was soon followed by an announcement by Binance CEO Changpeng Zhao that he was selling nearly a half billion dollars' worth of FTX Tokens. Believing their value would plummet as a result, investors made a disorderly run for the exits that send FTX plummeting.
With the situation likened to a "Lehman Brothers moment" for cryptocurrency, referencing the collapse of the investment firm that precipitated the financial markets' implosion in 2008, Binance suddenly reversed course and announced it would be buying FTX amid its "liquidity crunch." The purchase came after FTX approached its rival for help.
The fallout of the crypto crisis on Block is probably overwrought, as its core seller platform and expanding Cash App payments platform are exhibiting the type of growth investors typically look for. Considering the headwinds being reported by Block's rivals, its own market-beating results stood in stark contrast to the trend last week.
There's mostly tailwinds for Block right now, and this sideshow in crypto should be one that eventually passes it by.