coinedition.com
Changpeng Zhao (CZ), the CEO of Binance, the largest crypto exchange, recently announced that his company would be liquidating its entire FTT token portfolio as a post-exit risk management.
FTT is the native coin of the FTX exchange. Binance’s CEO took the financial decision after an investigative report by a news outlet revealed that FTX’s balance sheet primarily contains FTT tokens rather than independent assets like a fiat currency or other cryptocurrency.
According to analysts, the main issue is that the FTT token has zero utility and virtually no demand. Consequently, the coin may become an illiquid asset putting investors at significant financial losses, similar to the case of Terra LUNA.
Last year, after Binance decided to exit from FTX equity, it received roughly $2.1 billion in remuneration in a stablecoin and FTT rather than stablecoin alone. A crypto enthusiast alleged that it was because the CEO of FTX, Sam Bankman-Fried, ‘desperately needed to keep the value of FTT inflated to continue attracting outside investors with inflated valuations.’
They continued:
Now CZ has seen the evidence that FTT is just a massive circle-jerk flywheel scheme. So he hopped out of it and started selling his position so that he was not left holding bags.
Furthermore, a market tracking platform, @ScopeProtocol, revealed that FTX has been experiencing panic withdrawals over the last seven days as its balance of stablecoins, USDT and USDC, dropped by 95%. However, it noted that other prominent market participants like Alameda kept filling holes for the exchange.
Notably, Binance pledged to swap its FTT holdings for other coins in ways that would have little to no impact on the crypto market within the coming few months.