Cryptocurrency exchange Binance CEO Changpeng “CZ” Zhao said his company will liquidate its entire position in FTX Token (FTT), the native token of rival exchange FTX.
In a November 6th tweetZhao said the decision was made after “recent revelations that have come to light.”
In a later tweet, CZ stated that the FTT’s liquidation was “just post-exit risk management,” citing lessons learned from the fall of Terra Luna Classic (LUNC) and its impact on market participants.
He added, “We will not support people who are behind their backs lobbying against other industry players.”
The liquidation of our financial transaction tax is just a post-exit risk management learning from LUNA. We have provided support before, but we will not pretend to make love after the divorce. We are not against anyone. But we will not support people who lobby against other industry players behind their backs. Continue.
— CZ Binance (@cz_binance) November 6, 2022
Cointelegraph understands that Binance’s decision to liquidate the token stems from reports of a recently leaked balance sheet from Alameda Research, founded by Sam Bankman-Fried, claiming that Alameda’s assets were worth billions of dollars bound in the token of FTX.
However, Alameda Research CEO Caroline Ellison said in a Nov. 6 tweet that the balance sheet did not reflect the real story, noting that the sheet in question was only for “a subset of our business units” and other assets worth over 10 billion US dollars. are not reflected there.”
– The balance sheet shows some of our largest long positions; We obviously have hedges that are not listed
– Given the tightening of crypto lending space this year, we have since returned most of our loans— Caroline (@carolinecapital) November 6, 2022
Bankman-Fried supported Ellison’s claim in a tweetand said there were “a bunch of unfounded rumors going around”.
Cointelegraph contacted Binance to clarify the rationale for the liquidation, with a spokesman saying the company has no further updates “at this time.”
Related: Bankman-Fried is misleading regulators by discouraging centralized funding
Zhao didn’t specify how much FTT Binance would be selling, but revealed that the exchange lost around $2.1 billion equivalent in Binance USD (BUSD) — the exchange’s stablecoin — due to its exit from FTX shares last year. and FTT held.
He added that Binance would attempt to sell the tokens in a manner that “minimizes market impact” and stated that he expects the token sale to take “a few months to complete.”
On-chain analysis revealed that nearly 23 million FTTs worth around $584 million were transferred to Binance from an unknown wallet at the time, which Zhao confirmed as part of the exchange’s token offload.
Yes, that’s part of it. https://t.co/TnMSqRTutr
— CZ Binance (@cz_binance) November 6, 2022
The price of the FTT spun around in a series of announcements and within two hours on November the price surged from around $23 to $24.50 followed by a over 9% plunge to $22.28. The FTT is down over 4.3% over the past 24 hours and is trading around $22.50.