Key Takeaways:
- FTT Token Price Drops Further as Binance Liquidation Worries Traders
- By publicly stating that Binance will liquidate all of its FTT holdings, Changpeng Zhao had raised questions about the stability of the FTT token and subtly that of FTX.
As Binance started liquidating its tokens as a result of recent revelations that have come to context, according to Binance CEO CZ, FTX’s native token FTT had a turbulent weekend. The FTT token is down about 9.4% on the day.
After a document by CoinDesk last Wednesday revealed that FTX’s sister company Alameda Research may have solvency problems, Binance CEO Changpeng Zhao announced that Binance will liquidate its surviving FTT tokens approved by the second-largest cryptocurrency exchange FTX on Sunday night Hong Kong time.
According to a follow-up story by Protos, the $5.82 billion in FTT booked on Alameda’s balance sheet as of June 30 was significantly higher than the $3.32 billion in FTT available on that day.
That balance sheet is loaded with FTX, more particularly, the exchange’s FTT token, whose holders receive a reduction in trading commissions on the exchange’s market. While there is nothing inherently wrong or undesirable about that, it does demonstrate that
Bankman-trading Fried’s powerhouse Alameda is largely built on the basis of a coin that a sister company created rather than an unbiased asset like fiat money or another cryptocurrency.
A $14 billion portion of FTX’s crypto assets are linked to the FTT token. Therefore, before the token started to recover, a 15% price decline would have decreased FTX’s holdings by about $2.1 billion.
Binance acquired the FTT tokens as an aspect of its departure from an upfront investment in FTX. Even though the news might seem bad for FTT, CZ has said he plans to sell the tokens in a way that significantly reduces the effect on the market.
The self-styled CZ had described the insolvency as post-exit risk mitigation and made comparisons to the Terra/Luna network crumble earlier this year, which forced several crypto investment firms into financial ruin.
Even though FTX and other Bankman-Fried affiliates were instrumental in preventing a system – wide downturn in the cryptocurrency investment space following the Terra/Luna implosion, Zhao’s deeds are even more substantial.
Protos submitted a Freedom of Information Act application to the Securities and Exchanges Commission (SEC) for any files related to investigations into FTX US for attempting to sell unlicensed securities due to concerns that exchange tokens could be viewed as securities.
Sam Bankman-Fried hasn’t been hesitant to advocate for FTT on his platform. He wrote on twitter with a screenshot of the FTX interaction from October 10 showing an order for $2,732,437.50 in FTT. Although Bankman-Fried made sure to state that the post was “not financial advice,” it is unclear to what extent this shields him.
In accordance with a tweet from Ki Young Ju, co-founder and CEO of CryptoQuant, stablecoin reserves on FTX have dropped by 93% in the last two weeks and reached a low point in a year on Monday. As of 1 p.m. Hong Kong time, FTT’s price had dropped 5.31% over the previous day while its trading volume had increased 307.71%, according to CoinMarketCap.
“We supported each other in the past, but we won’t act romantic after getting divorced. We have no enemies,” Zhao wrote in a tweet on Monday. But we won’t back individuals who work behind the backs of other business players to lobby against them. Zhao said nothing further about his remark.
