Following rumors regarding Sam Bankman-FTX Fried's cryptocurrency exchange's solvency, Binance CEO Changpeng "CZ" declared that the exchange would sell off all of its FTT tokens. About 23 million FTX tokens, worth $529 million, are held by Binance. Sam Bankman-Fried tweeted early on Monday amid the rumors "Fine with FTX. Capital is fine."
KEY LESSONS
- Following rumors questioning the solvency of FTX, Binance declared that it is selling up its holdings of FTT.
- About 23 million FTT tokens, worth $529 million, are held by Binance.
- FTT, FTX's native token, decreased 12% in the past day as a result of the news.
The Bankruptcy Myth
When CoinDesk reported last week that Alameda Research's balance sheet was loaded with FTX's native exchange token, FTT, the story about the company's insolvency first surfaced. Alameda, FTX's sibling business, reportedly had assets totaling $14.6 billion. Locked FTT valued at $3.66 billion was discovered to be the trading company's largest asset, and FTT collateral valued at $2.16 billion was its third-largest asset. FTT accounts for more over $5 billion of the company's assets, casting doubt on its viability.
Sam Bankman-Fried, the creator and CEO of FTX, has come under fire for regulatory recommendations in a blog post that suggested restrictions regarding DeFi, which may be what prompted Zhao to act.
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Binance Wants to Be Safe
Terra (LUNA) fell earlier this year, therefore Binance wants to be ready this time with FTT tokens. "Liquidating our FTT is simple post-exit risk management, learning from LUNA," CZ wrote in another tweet. We supported each other in the past, but we won't act romantic after being divorced. No one is a threat to us. However, we won't endorse individuals who advocate against other business players behind their backs. Onwards.'' Due to market conditions and a lack of liquidity, the CEO predicted that the liquidation would take many months to complete.
The Bottom Line
Alameda Research's Caroline Ellison proposed to buy Binance's remaining FTT for a predetermined sum of $22 in order to lessen the harm. FTT, FTX's native token, decreased 12% in the past day as a result of the news.