During the night, there was a tension between Binance and FTX, two of the largest cryptocurrency exchanges. Binance CEO Changpeng Zhao pointed to the possibility that FTX’s native token FTT will experience a similar drop to the LUNA crash. Here are the details…
Binance CEO talks about FTX and FTT
cryptocoin.com As we reported, the crypto winter has caused a liquidity crisis for some major crypto firms. Following the collapse of Terra (LUNA), companies such as Three Arrow Capitals, Celsius, and Voyager took huge hits in the crypto market. The crypto community now fears that FTX and Alameda may face a major liquidity crisis and bankruptcy. The second richest crypto billionaire, Sam Bankman-Fried, is the founder of both FTX and Alameda.
The liquidity crisis surrounding Alameda came to the fore. Alameda is heavily exposed to FTX tokens. Reports reveal that as of June 30, $3.66 billion of the $14.6 billion owned by Alameda is in unlocked FTT tokens. That’s why Binance’s CEO announced that the company will gradually sell all its FTT holdings. The $584 million FTT has already been transferred to the Binance exchange.
CZ claims it wants to reduce the market impact of the liquidation. However, Ran Neuner, a CNBC crypto trader, believes he may be holding the tokens to deal maximum damage to FTX and Alameda. He also reveals that Alameda is leveraging FTX tokens. If there is enough selling pressure, they may face a margin call or liquidation. FTT has dropped close to 12 percent in the last 7 days.
Bankman-Fried responded to the developments
Following the development, FTX CEO Sam Bankman-Fried responded to Binance’s sale of FTT (FTX) assets. He sought collaboration between major industry players, not pointing to developments in Alameda Research or Binance’s sale of FTT. CZ has announced that it will gradually liquidate FTT to mitigate any market influence. Moreover, he emphasizes that this is not an attempt to harm FTX. Similarly, SBF claims to respect CZ’s contribution to the crypto community. He states that key market leaders should “not fight, build Blockchain.”
Also, Binance CEO said, “The liquidation of FTTs, we only learned after LUNA [post-exit] is risk management. We have supported before, but after the divorce, we will not pretend to be together. We are not against anyone. But we will not support people lobbying behind their backs against other industry players.”
Alameda offered to buy FTT
Dylan LeClair, a senior analyst at UTXO Management, also reveals the liquidity crisis Alameda is facing. Alameda Research CEO Caroline Ellison has offered to buy FTT from Binance for $22. Alameda Research has significant exposure to FTX tokens FTT. On June 30, Alameda held $14.6 billion in assets
Out of $14.6 billion, unlocked FTT tokens account for $3.66 billion. This means that Alameda has a high degree of investment in FTX. This raises questions about its financial viability as well. LeClair believes this is due to the company’s goal of not letting the market price drop below $22. This raises concerns about a possible Alameda and FTX bankruptcy.
Will the Binance move lead to a drop in BTC?
Cory Klippsten, CEO of Swan Bitcoin, expressed concern over the news that Binance has transferred over $560 million in FTT to the exchange. He believes FTX has major bankruptcy issues and considers it technically bankrupt. Lark Davis, a major crypto influencer, is emphasizing his followers to get their crypto out of FTX.
Another crypto influencer, The Moon Carl, stated that this development between Binance and FTX will cause a downward movement in the cryptocurrency space. Expecting the next few weeks to be “stormy,” The Moon Carl pointed to the possibility of Bitcoin falling to $13,000.
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