On Sunday, Binance CEO Changpeng “CZ” Zhao revealed over a Twitter post that the crypto exchange is moving to liquidate its entire position in FTT, the native token of rival exchange FTX.
Zhao said the company’s decision comes amid “recent revelations that have came to light” involving FTX. Binance received the FTT tokens as part of last year’s exit from FTX, an equity position it entered in 2019.
“Regarding any speculation as to whether this is a move against a competitor, it is not. Our industry is in it’s nascency and every time a project publicly fails it hurts every user and every platform,” wrote CZ in the Twitter thread.
Binance will try to liquidate its holding over a few months via the open market route due to the prevailing market conditions and limited liquidity. According to CZ, it will help in minimizing market impact.
Even though CZ didn’t specify the revelations, a recent Coindesk scoop might have been the reason.
Billionaire Sam Bankman-Fried has two primary crypto businesses: crypto exchange FTX and trading firm Alameda Research, both of which are established players in their respective fields.
According to certain financial documents reviewed by CoinDesk, Alameda Research has sizeable exposure in FTX. As of June 30, the trading firm carried $14.6 billion assets in its books, with unlocked FTT tokens worth $3.66 billion as its single biggest holding.
There were also about $292 million locked FTT tokens among its $8 billion liabilities. This highlights an unusually high exposure to centrally controlled FTT tokens that can be printed out of thin air.
Alameda CEO Responds
Caroline Ellison, CEO of Alameda Research, proposed to buy the FTT tokens from CZ for $22 each to help with minimizing the market impact.
She also said the report on Alameda’s balance sheet only highlights the biggest long positions; however, there are over $10b of assets in hedges that aren’t listed.
Meanwhile, Sam Bankman-Fried, CEO of FTX, has also come under fire for putting forth regulatory proposals recommending restrictions to DeFi.
FTX Price Plummets
Following the news, FTT plummeted around 9% before recouping some of the losses. It is currently trading at around $22.50, according to Coinmarketcap data.