YEREVAN (CoinChapter.com) – On Nov 6, Changpeng Zhao, the CEO of crypto exchange Binance, announced the company’s intention to “liquidate” their FTT—the native token of another leading digital asset exchange FTX—due to “recent revelations.”
Binance to Drop Its FTT Holdings
Zhao noted that “due to market conditions and limited liquidity,” the process will take several months. Moreover, Binance will dump its FTT stash to “minimize market impact.” He added that the sale is not a jab at a competitor, “as every time a project publicly fails, it hurts every user and every platform.”
Zhao has a bone to pick with FTX?
Meanwhile, speculations flared on Twitter, suggesting the less-than-friendly relationship between Binance and FTX heads played a part in the decision. Thus, Zhao provided another comment, feeding the gossip.
Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won’t pretend to make love after divorce. We are not against anyone. But we won’t support people who lobby against other industry players behind their backs. Onwards.
tweeted Zhao on Nov 7.
FTX CEO Sam Bankman-Fried refrained from addressing the issue directly and instead tweeted about FTX’s SEND feature. “Why don’t you address the elephant in the room, bro? Insolvency” mocked the comment section.
However, before discussing the possible impact of Binance’s decision, it is important to note the “recent revelations.” What is the hype around FTX all about?
Alameda Research Balance Sheets Raise Questions About FTX Liquidity
On Nov 2, private financial documents surfaced, exposing the “unusually close” ties between FTX and Alameda Research, a sister company founded by the FTX CEO Sam Bankman-Fried. While there is
The report shows that Alameda Research rests on an asset foundation largely made up of FTT, $3.66 billion FTT to be exact. While the situation is not illegal per se, it raised concerns among traders and brought on parallels with Celsius, an infamously insolvent crypto lender. In detail, Celsius has been accused of artificially inflating its balance sheet by manipulating its native token, CEL.
Alameda CEO Caroline Ellison commented on the balance sheet in question, saying that the company has over “$10 billion of assets that aren’t reflected there.”
Moreover, she replied to Binance CEO’s tweet with a proposal to buy off the FTT.
If you’re looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22!
FTX is losing stablecoins
However, Alameda Research CEO’s comments did little to stave off insolvency fears. Moreover, sources report a significant stablecoin outflow from FTX. @WuBlockchain, a China-based crypto analyst with a substantial following, reported the news on Nov 7, noting the source.
Also read: Swiss National Bank Posts Largest Loss In Its History.
What will happen to FTT?
FTT charts showed a significant sell-off following the news, per the red vertical spike in trading volumes at the bottom.
Moreover, technical indicators back the bearish predictions, as the digital asset painted a “descending triangle.” The formation features a dropping resistance and flat support that enclose the price action, preventing sharp breaks.
The descending triangle is a continuation pattern. Thus, FTT experienced a sharp decline before the formation, so another leg down is expected. Moreover, the chances are FTT will hit $10 before the end of 2022, 50% lower than the current value.
Is FTX insolvent? It is not yet clear. However, the planned FTT liquidation by Binance is likely to impact the market after all. Moreover, the traders have a low tolerance for platforms plagued with liquidity issues since the Terra implosion and a chain of DeFi platforms declaring insolvency.
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