Sam Bankman-Fried has insisted “FTX is fine” after his crypto empire was rocked by a series of allegations.
The saga links back to a CoinDesk article last week that delved into the finances of Alameda Research, FTX’s sister company.
An investigation of Alameda’s balance sheet revealed that it mainly consisted of FTT, a token issued by FTX that delivers discounts on trading fees.
CoinDesk suggested that this shows Alameda “rests on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto.”
Over the weekend, Crypto Twitter was rocked by another bombshell after a thread was posted by Changpeng Zhao, Binance’s CEO.
CZ’s exchange used to have a minority stake in FTX, but exited the investment last year and ended up receiving $2.1 billion — consisting of the BUSD stablecoin and FTT tokens. He wrote:
“Due to recent revelations that came to light, we have decided to liquidate any remaining FTT on our books.”
Zhao stressed that Binance would try to ensure that the liquidations “minimize market impact” — but current conditions and limited liquidity may mean this process takes months. He added:
“Binance always encourages collaboration between industry players. Regarding any speculation as to whether this is a move against a competitor, it is not. Our industry is in its nascency and every time a project publicly fails it hurts every user and every platform.”
Late on Sunday night, CZ posted further tweets that offer an insight into what was going on behind the scenes.
“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.”
Binance is the parent company of CoinMarketCap.
Shortly after CZ confirmed that Binance would be liquidating its FTT holdings, Alameda Research’s CEO Caroline Ellison tweeted:
“If you’re looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22!”
Ellison added that the balance sheet information highlighted by CoinDesk “is for a subset of corporate entities” — and there is over $10 billion in assets that weren’t reflected.
Nonetheless, the flurry of speculation has hit FTT hard — and it has fallen by 14.5% over the past seven days. It’s the worst-performing cryptocurrency in the top 30 by market cap.
SBF tried to smooth things over on Monday by tweeting:
“FTX has enough to cover all client holdings. We don’t invest client assets (even in treasuries.) We have been processing all withdrawals, and will continue to be.”
And stressing that his exchange has “a long history of safeguarding client assets, and that remains true today,” he added:
“I’d love it, @cz_binance, if we could work together for the ecosystem.”