Binance To Liquidate FTX’s FTT Holdings “Due To Recent Revelations”

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Binance To Liquidate FTX’s Token FTT Holdings “Due To Recent Revelations”
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Binance will sell the remaining FTX’s FTT tokens on its balance sheet according to the exchange’s CEO Changpeng Zhao “CZ”. Making the announcement late Sunday, CZ noted that the decision was reached “due to recent revelations that have come to light”.

“As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion equivalent in cash (BUSD and FTT). Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books.” CZ wrote.

However, CZ noted that in liquidating their position, they would consider the asset’s holders’ well-being by selling it in separate batches over the next few months. “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,” he added.

The announcement comes after “Whale Alert”, a service that tips users on abnormal crypto transactions, revealed on Saturday that 23 million tokens had been moved to Binance, eliciting feelings of an imminent dump. Recently CZ reacted to an investigation into FTX’s financial health posted by crypto sleuth Mike Burgersburg on November 4th.

Burgersburg deductions relied on a report from Coindesk, which showed FTX and Alameda, helmed at one time by Sam Bankfried were now two different entities. However, it emerged that FTT tokens dominated Alameda’s balance sheet. In July, it was revealed that Alameda owed Voyager digital about $377 million, making it the second largest borrower to now cash-beleaguered crypto lending firm after Three Arrows Capital.

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Our sources indicate these holdings are worth several hundred million dollars. The firm’s solvency rests on crypto tokens issued by related parties.” Burgersburg wrote. “This might sound familiar because this is the same model used by Celsius Network and many other crypto firms to spin billions of dollars in assets out of thin air. We call this the “flywheel scheme”, he added. 

The revelation sent panic among FTT holders, who sold their holdings in the notion that FTX was headed to insolvency. In less than 48 hours, FTT has dropped by over 16% following Saturday’s disclosure. However, for others, apart from FTX’s financial health, it appeared like Binance is trying to edge out FTX, given that it is its biggest competitor based on CoinMarketCap data.

“This Binance-attacking-a-technically-insolvent-FTX thing absolutely can generate its own momentum and become a self-fulfilling prophecy,” tweeted Cory Klippsten, CEO of Bitcoin financial services firm Swan.com. “If traders and PMs do the rational thing and abandon Scam Bankster-Fraud’s illegal + immoral “crypto” casino, his fall is 100% deserved,” he added.