Binance CEO Changpeng “CZ” announced that the exchange would dump all its FTT tokens following speculation regarding the solvency of Sam Bankman-Fried's FTX crypto exchange. Binance holds about 23 million FTX tokens, worth about $529 million. Amid the rumors, Sam Bankman-Fried tweeted early Monday morning that "FTX is fine. Assets are fine."
- Binance announced that it is liquidating its holdings of FTT, following speculation regarding the solvency of FTX.
- Binance holds about 23 million FTT tokens, worth about $529 million
- Following the news, FTT, the native token of FTX, fell 12% in the past 24 hours.
The Insolvency Rumor
FTX's insolvency rumor began when CoinDesk revealed in an article last week that Alameda Research's balance sheet was stacked with FTX's native exchange token, FTT. FTX's sister company Alameda had assets worth $14.6 billion, according to the report. The trading firm's largest asset was revealed to be $3.66 billion in locked FTT, while its third biggest asset was $2.16 billion in FTT collateral. Over $5 billion of the company's assets are FTT, raising questions about its solvency.
Sam Bankman-Fried, FTX's founder and CEO, has been criticized for his regulatory proposals in a blog post that recommended restrictions regarding DeFi, which may have triggered the move by Zhao.
Binance Wants to Be Safe
Earlier this year, Terra (LUNA) collapsed, so Binance wants to be prepared this time with FTT tokens. In another Tweet, CZ stated: “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.''The liquidation is expected to take a few months to complete due to market conditions and limited liquidity, said the CEO.
The Bottom Line
To minimize the damage, Alameda Research's Caroline Ellison offered to purchase Binance's remaining FTT for a set price of $22. Following the news, FTT, the native token of FTX, fell 12% in the past 24 hours.