Over a few hours, FTT, the utility token of the FTX exchange, fell about 28%—from above $22 to below $16.
The price drop occurred amid the ongoing standoff between FTX and Binance, and concerns about the financial health of the exchange led by Sam Bankman-Fried.
At the same time, Bitcoin slipped below the $20,000 level, dragging the rest of the market lower. FTX token’s decline was the deepest among top-50 assets by market cap.
On November 6, Binance CEO Changpeng Zhao said the company aimed to divest from FTT. Assets, together with BUSD, totalled about $2.1 billion as a result of the company’s exit from its stake in FTX.
He stressed that the move was not aimed at a competitor, as Binance regards maintaining resilience in the developing industry as important. The reason cited were “recent revelations.”
Presumably, he was referring to the investigation in CoinDesk, which disclosed details of Alameda Research’s balance sheet, closely linked to FTX.
“All want greater transparency in our industry, right? My tweets were simple. There were questions about a large ($580 million) FTT deposit on Binance, and we openly stated that we were closing that position”, — commented Zhao on the ensuing discussion.
CEO of Alameda Research Caroline Ellison stated readiness to buy back FTT from Binance at a price of $22.
When asked to comment on Zhao’s proposal, she asked:
“Do they have or will they buy $580m of BNB?”
They have or will buy $580m of #BNB?
— CZ 🔶 Binance (@cz_binance) November 7, 2022
However, he rejected the suggestion that Binance would offer Alameda to buy BNB in order to swap it for FTT.
“I didn’t say that. It was a question, not a commitment. I think we will stay in the free market”,
I didn’t say that. It was a question, not a commitment. I think we will stay in the free market.
We still hold LUNA (now LUNC) today. 😂
— CZ 🔶 Binance (@cz_binance) November 7, 2022
Initially Zhao assured that Binance would complete the sale over coming months to minimize market impact.
He again emphasised that the decision to close the FTT position was not aimed at a competitor. The head of Binance also linked to a thread by analyst Miles Deutscher, in which warning signs about Alameda and FTX’s financial position were laid out.
The fact that it sparked such levels of «discussions» was surprising. There were also conspiracy theories that I somehow orchestrated this whole thing. If you read this thread, you would appreciate that no one can orchestrate this. 3/4 https://t.co/CV2QwC7Umr
— CZ 🔶 Binance (@cz_binance) November 7, 2022
Arcane Research analysts noted that after the July decision by the commission, in bitcoin pairs, Binance increased its share in both the spot market and derivatives trading. Much of this was driven by FTX.
Experts at Scoop Protocol estimated that in the last week about 20% of all deposits on Binance came from FTX (~$1.17 billion).
Discussing the sale of FTT, in one of Zhao’s tweets he gave a hint about the token’s possible fate, noting that Binance still owns LUNA (now LUNC) the Terra collapse.
“If unfortunately FTX becomes another LUNA, nobody in the industry can benefit from the incident, including Binance. Both customers and regulators will lose some confidence in the entire industry. I hope Zhao will consider stopping the sale of FTT and striking a new deal with SBF”, — said OKX founder Star Xu.
If unfortunately FTX becomes another LUNA,nobody in the industry can benefit from the accident including Binance. Both customers and regulators will lose some confidence about the whole industry .I hope CZ can think about stop to sell FTT and make a new deal with SBF.
— Star (@starokg) November 8, 2022
In July 2021, FTX, following a Series B funding round, raised $900 million.
The deal provided the resources for Binance to repurchase shares in the platform for an undisclosed amount that it had invested in the platform in December 2019.
Subsequently, Bankman-Fried explained the “divorce” from Binance as a difference in business approaches.
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