Bitcoin prices dropped below $16,000 Wednesday afternoon after Binance, the largest crypto exchange, backed out of its emergency deal to acquire rival FTX.

"As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of http://FTX.com," Binance said in a statement.

Bitcoin plunged to $15,985, the lowest price point the largest cryptocurrency has seen since November 2020, according to crypto indexing platform CF Benchmark. It's down 12% for the last 24 hours and 20% for the last seven days.

The new development adds to the mounting concerns over FTX, its equity investors and investments as well the implications its troubles could have for other crypto firms across the industry.

"Every time a major player in an industry fails, retail consumers will suffer," Binance said in its statement. "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."

Even before Binance decided to walk, there were signs of trouble.

A report Wednesday from Semafor — which is backed by FTX Founder and CEO Sam Bankman-Fried —said most of FTX's legal and compliance staff quit Tuesday evening, while a Coindesk report Wednesday morning, citing unnamed sources, raised doubts the deal would go through.

The Securities and Exchange Commission (SEC) is also reportedly expanding its investigation into the cryptocurrency platform's U.S. subsidiary, according to the Wall Street Journal.

"Clearly, something was off because there was a large hole in FTX's balance sheet where they were unable to meet customer deposits," Sean Farrell, head of digital asset strategy with Fundstrat, told Yahoo Finance before the news of the broken deal came out. "It's likely that it came from co-mingling customer deposits with trading practices of Alameda," which is both majority owned and founded by Bankman-Fried and FTX's market maker.

Farrell added the gap between liabilities is likely above $2 billion while as much as $6 billion would not surprise him.

FTX has so far have declined to comment on the matter.

Other cryptocurrencies also plunged on Wednesday as the events unfolded.

The second largest cryptocurrency, ether (ETH-USD) has sold off more than 15% from $1,336 to $1,118 over the past day. FTX's exchange token FTT, fell by as much as 50% on the day from $17 to $2.5.