Binance Moves To Liquidate Its Entire FTT Token Holdings

Binance Moves To Liquidate Its Entire FTT Token Holdings

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Binance CEO Changpeng Zhao revealed on Sunday that his cryptocurrency exchange would be liquidating its entire holdings of the FTT token. 

The FTT dump comes on the heels of Sam Bankman-Fried’s comments around regulatory proposals. 

Changpeng Zhao To Sell Remaining FTT Tokens 

Responding to reports about Alameda Research’s balance sheet, Binance CEO Changpeng Zhao stated on Twitter that Binance would be selling the remaining FTT tokens held on its books. The FTT tokens were taken on as part of Zhao’s exit from Alameda Research’s sister concern, FTX. However, Zhao did not state how much FTT Binance would sell. According to information available in the public domain, Binance had received nearly $2.1 billion in BUSD (Binance’s stablecoin) and FTT tokens. 

“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 come to light, we have decided to liquidate any remaining FTT on our books.”

Willing To Buy Back The FTT 

Following the news, the Chief Executive of Alameda Research, Bankman Fried’s crypto trading firm, Caroline Ellison, offered to purchase the remaining FTT tokens from Binance at a price of $22. She added that this would help minimize the market impact of such a large sale as well. 

“@cz_binance, if you’re looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22!”

Zhao stated that the liquidation would take a few months due to limited liquidity and prevailing market conditions. He added that the liquidations would also be done in a way that would minimize liquidations. Despite the statement, FTT saw a nearly 10% drop over the past day, dropping to $23 after falling to a low of $22. 

Potential Impact 

Saturday saw 22,999,999 FTT tokens, worth $585 million at the time, be transferred from a wallet to the Binance exchange, according to data from EtherScan. This number was equivalent to nearly 17% of the circulating supply of FTT tokens. Zhao later confirmed that the shifting of the funds was part of Binance’s strategy to liquidate its FTT position. 

Zhao added that the decision to liquidate its FTT position was not a potshot at one of its competitors. However, users speculated that such a large-scale selling of the FTT token could have a considerable impact on the loans backed by the FTT token. 

“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. Let the party begin!”

Binance has been an early investor in FTX, although the size of the initial investment is unknown. At the time of Binance’s exit, Zhao had stated, 

“We’ve seen tremendous growth from them, we’re very happy with that, but we’ve exited completely.”

Zhao stated that Binance usually holds the tokens for the long term, but Binance has held the FTT token for too long. 

The Balance Sheet Fiasco

Zhao’s announcement is significant because it comes after several rumors about the health of Bankman-Fried’s trading firm, Alameda Research. The leaked balance sheet showed that Alameda owned around $5.8 billion worth of FTT tokens, including the ones pledged as collateral as of 30th June. The sheet revealed that the firm had $14.6 billion in assets, and $8 billion in liabilities, including $7.4 billion worth of unidentified loans. 

CEO of Alameda Research, Caroline Ellison, addressed these rumors, stating that the firm had $10 billion in assets which were not reflected in the leaked document. She also added that Alameda Research had already returned a significant chunk of its outstanding loans. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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