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FTX Token (FTT) price witnessed a gigantic drop of nearly 85% in the past trading day, slashing the price from above $25 to as low as $2.5. The huge drop was led primarily due to the rounds of the exchange being insolvent as it halted withdrawals. On the other hand, the market participants remained nostalgic for the past event, hinting at the resurgence of a Terra-like collapse soon.
Moreover, Binance’s CEO, CZ, also cited the same reference as the main reason to liquidate all of the platform’s FTT holdings. Since then the token is experiencing a bloodbath as inventors lose trust heavily. However, the series of events happening over the past seven days signals the possibility of a pre-determined plan by Binance to acquire FTX.
In the recent update, Binance is all set to buy FTX. But how did we get here? It all started when the crypto trading giant, Alameda Research’s balance sheet displayed a significant value tied up with the sister crypto exchange FTX’s native token FTT which was backed by nothing. The platform held nearly $5.8 billion worth of FTT tokens within the total assets held worth $14.6 billion.
Meanwhile, total liabilities were around $8 billion of which $7.4 billion were loans with another $292 million worth of FTT tokens owned. Furthermore, rumours of Alameda Research being insolvent was being circulated within the space.
This could have prompted a significant holder of FTT, Changpeng Zhao, the CEO of Binance, to liquidate all the FTT holdings, which are equivalent to $2.1 billion. Alameda’s CEO also offers to buy back the tokens, but CZ prefers to liquidate in the open market, probably to create selling pressure. This is when trouble in paradise was planted!
The FTX exchange soon halted the withdrawals, as Terra did then, which panicked the investors, who tried to remove funds from the centralized exchange. In the end, FTX accepts to sell itself to Binance amid the liquidity scare within the space.
The events that occurred point towards the pre-determined plan to acquire the world’s largest exchanges and beat down the smartest guy in the room. However, the events, presently have no backing for the claim, but the series of events do point out the possibility!!