By
Chimamanda U. Martha
April 19th, 2024
Amid speculations over the financials of Alameda Research, Binance chief Changpeng Zhao decided to liquidate his remaining holding of FTX tokens leading to a strong price correction.
Last week, CoinDesk shared a report expressing concerns over Alameda Research’s balance sheet. Alameda is a trading firm owned by FTX exchange CEO Sam Bankman-Fried. On Sunday, November 6, Binance chief Changpeng Zhao said that he would be selling the remaining FTX tokens (FTT) on his books. He said that Binance took an exit from FTX equity last year while receiving nearly $2.1 billion USD in cash equivalent like BUSD and FTT. He further added:
“Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. We will try to do so in a way that minimizes market impact. Due to market conditions and limited liquidity, we expect this will take a few months to complete.”
The Binance chief said that one should not see this as a move against their competitor. He also stated that Binance would always encourage collaboration between industry players. CZ also said that they would be staying transparent in their actions.
However, CZ’s announcement certainly made a strong announcement on the price of FTX tokens (FTT). The FTT price tanked instantly by 10% after CZ made this announcement. As of press time, the FTT token is trading 4.5% down at a price of $22.1 with a market cap of $2.9 billion.
The CoinDesk report states that “both these firms (FTX and Alameda) have different businesses but the balance sheet of Alameda research shows significant amount of unlocked FTT token worth nearly $3.66 Billion out of a total $14.6 billion”.
The report expresses some concerns about the illiquid FTT tokens that Alameda is showing up on its balance sheet.
CEOs of FTX and Alameda Respond to the Decision of Binance CZ
Soon as the news caught like wildfire on Sunday, the CEOs of both FTX exchange and Alameda Research responded. Alameda’s CEO Caroline tweeted that her trading firm’s financial condition is stronger than what’s reflected in CoinDesk’s report.
She also replied to CZ stating that if Binance is looking “to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22!”
As the two crypto giants lock their horns, Sam Bankman-Fried, the CEO of crypto exchange FTX asked for greater cooperation. However, CZ has called this move a “house cleaning” effort. He said:
“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”.
In another Twitter thread earlier today, Sam Bankman-Fried said that FTX keeps its financials highly audited. He also added that their operations are highly regulated. “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,” said SBF.