FTX exchange’s precipitous decline
We have been following for a few days now some statements that are news and obviously shocks many of us who make life in the world of cryptocurrencies, the same is due to statements made by the CEO of the cryptocurrency exchange Binance, Changpeng “CZ” Zhao and the CEO of FTX exchange, Sam Bankman-Fried better known as SBF.
CZ said his company will liquidate its entire holdings of FTX Token (FTT), the native token of competing exchange FTX, Zhao said the decision was made after “recent revelations that have come to light.”
explained that FTT’s liquidation was “just post-exit risk management,” referring to lessons learned from Terra’s Luna Classic (LUNC) crash and how it affected market players.
The whole move follows a recently leaked balance sheet from Alameda Research, founded by Sam Bankman-Fried, which alleges that billions of dollars of Alameda’s assets are tied up in the FTX token.
However, Alameda Research CEO Caroline Ellison, in a Nov. 6 tweet, said the balance sheet did not reflect the true story, noting that the sheet in question is only for “a subset of our corporate entities and other assets worth over USD 10 billion are not reflected there.”
The Chinese-born CZ clarified that they could do the FTT sales over several months, in order to minimize the impact of this move on the market. He argues that this is not a move against FTX.
Binance’s CEO did not make explicit, so far, what recent disclosures have come to light. Neither did Sam Bankman-Fried, CEO of FTX, who merely tweeted, “We are all in this together, and I wish everyone the best moving the industry forward. Because I have a lot of respect for what they have done to build the industry as we see it today, whether they reciprocate or not, and whether we use the methods or not. Including CZ.”
Given such a situation, there are those who fear cascading liquidations that will produce what is known as a death spiral or massive damage to the cryptocurrency industry.
FTX exchange CEO Sam Bankman-Fried said this Nov. 7 that, “A competitor is trying to chase us with false rumors.” And he clarified that FTX and the assets are fine.
SBM clarified that FTX has enough to cover all client holdings. We do not invest client assets (not even in Treasury bonds). We have been processing all withdrawals and will continue to do so, he said. He added that it is heavily regulated, even when it slows us down.
In turn, the FTX CEO stressed that they have GAAP audits with more than USD 1 billion of excess cash. And, he commented, they have a long history of safeguarding client assets and that remains true today.
Given that, he concluded with a message tagging Binance’s CEO telling him that he would love it if they could work together for the ecosystem. This comes a day after Changpeng Zhao’s comments drove the FTT price down 15% in a matter of hours.
However, this afternoon there were statements from both CEOs, where it seems that they reached an agreement in order to maintain the market and the projects they have worked so hard on.
Here is what I have collected from the twitter network for your knowledge and evaluation.
The final deal is the sale of FTX.com to Changpeng “CZ” Zhao, in my personal opinion the whole crypto market is being affected, it is one of the reasons for the fall of all currencies.
So if the sale is finalized the two Exchange majors could be just one.
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