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Binance CEO Changpeng Zhao announced that the firm had begun liquidating FTT tokens
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Binance’s decision to liquidate all of its FTX tokens might bring another Terra LUNA like crypto crash.
While most of the cryptocurrencies are enjoying a bull run for more than a week, FTX’s native token, FTT, was hit with severe volatility after Binance’s recent move. On Nov 6, Binance CEO Changpeng Zhao announced that Binance had begun liquidating FTT tokens after which the FTT declined nearly 9.4%.
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
— CZ 🔶 Binance (@cz_binance) November 6, 2022
Also it’s a known fact that FTX uses FTT as collateral for various loans and because of which there is a fear of another crypto crash. At the time of writing, FTX token is selling at $22.16 with a fall of 4.38% in the last 24hrs.
Now, with Binance’s decision to liquidate all of its FTX tokens might bring another Terra LUNA like crypto crash.
Looks like CZ is slowly dumping $500M worth of FTT on the market, if he continues many of Alameda's FTT backed loans will be liquidated causing a death spiral.
— Bitcoin vs. Gold (@VersusBtc) November 6, 2022
Let the party begin! pic.twitter.com/lKJ1zwr17S
Binance To Liquidate All Of Its FTT Tokens
Basically, the FTT tokens that Binance holds are the assets that are received as part of its exit from an early investment in FTX. However, CZ claims to liquidate its holdings gradually so that the crypto market is not impacted.
As per the reports, Alameda research, a trading firm that is owned by Sam Bankman Fried (SBF) was holding more than $3 Billion worth of FTX exchange unlocked token on its balance sheet. Here, FTX exchange is the one that issues FTT tokens and FTX is also owned by SBF.
Though there is no proper reason for Binance’s move against SBF and FTT token, one reason might be because Binance considers holding FTT token on their books as liability.
Now, after Binance other market participants have joined, such as Jump Trading, has withdrawn nearly 40.4 million USDC from FTX exchange . Also around $109.8 million worth of cryptocurrency has been moved from FTX exchange to Nexo, a crypto lending platform which also includes 56,432 ETH and $13.9 million in stablecoins.
However, FTX CEO SBF has asked its users not to panic as all the withdrawals are working well. He also claimed that FTX and its group of companies have audited financial data.
3) We've already processed billions of dollars of deposits/withdrawals today; we'll keep going. (Taking up anti-spam checks to process more–sorry if you got those. We're hitting node rate capacity, will keep going.) Also tons of USD <> stablecoin conversions going on.
— SBF (@SBF_FTX) November 6, 2022
The news is definitely hampering FTT token’s performance and currently $20-$21 is the major support area. If the token falls below $20 there will be more downfall ahead.