Yesterday, the co-founder and CEO of Binance, Changpeng chow chowHe has publicly stated that he intends to get rid of FTX cryptocurrency from his wallet.
Our FTT filter is just post-exit risk management, learning from LUNA. We’ve offered support before, but we’re not going to pretend to make love after the divorce. We are not against anyone. But we will not support people who lobby against other players in the industry behind their backs. onwards.
– Czechoslovakia 🔶 Binance (cz_binance) November 6, 2022
The words written by CZ certainly sound harsh, to compare the current situation with the situation inEarth/Moon ecosystem collapse.
CZ also posted a link to the on-chain transaction involving 23 million FTT tokens transferred to a Binance wallet.
Yes, that’s part of it. https://t.co/TnMSqRTutr
– Czechoslovakia 🔶 Binance (cz_binance) November 6, 2022
Around More than 584 million dollars At current exchange rates, so the transaction is definitely of high volume.
FTT (FTX) crypto price following Binance CEO announcement
Yesterday FTT ratean FTX token, dropped in a matter of hours from $25.5 to $22, Then back up for a while. Now, though, it’s back down to $22.
This is not a random number, as it is the same price that Alameda Research pledged yesterday to buy the tokens that Binance decided to sell.
@employee If you’re looking to reduce market impact on your FTT sales, Alameda will buy everything from you today at $22!
– Caroline (@carolinecapital) November 6, 2022
FTT price now is 14% less than last week, But only 9% less than last month. So the dreaded crash hasn’t happened yet.
Compared to its all-time high in September 2021, it is down 73%, which is in line with the losses of many other still-strong cryptocurrencies.
It should be noted that before the collapse of the Earth’s ecosystem, the price was above $39, which is certainly higher than the current figure, but not by much.
In short, thanks to Alameda’s CEO’s remarks, the price of FTT really held up yesterday.
Alameda Research is a quantitative trading firm founded in 2017 by Sam Bankman-Fried. Sam Bankman Friedbetter known as SBF, in 2019 founded the cryptocurrency exchange FTX, one of the largest in the world.
As of 2021, SBF owns approximately 90% of Alameda Research.
The company’s current CEO is American Trader Caroline Ellisoni.e. the same person who publicly responded to CZ telling him that Alameda is ready to buy all of Binance’s FTT tokens at $22.
The objective is correct Alameda Research.
Rumors have been circulating for days that the company may be insolvent. Yesterday’s statements by CEO Ellison might suggest the opposite, but rumors about a possible bankruptcy of Alameda spread on social networks yesterday.
It all starts from the company’s official balance sheet. As of June 30, it held $14.6 billion in assets, however, a large portion of which is in FTT tokens. Its market value at that time was $24.
FTT is a token created and released by FTX, which is the other company of SBF.
Because Binance wants to liquidate FTX crypto
the point Is that the company has a total of $5.8 billion in FTT, but also had $7.4 billion in loans. In fact, it was practically able to borrow that money thanks to the collateral provided by the FTT tokens created by the sister company.
However, the biggest problem is another one, which is the fact that there are only 133 million FTT tokens circulating on the cryptocurrency markets, while a total of 328 million have been created. The difference is the tokens that Alameda owns and puts on balance sheet, used as collateral for loans.
Moreover, not only does Alameda own 180% of the supply of FTT tokens in circulation, but 93% of it is just concentrated in 10 addresses on the chain.
Moreover, Messari also pointed out that only about 200 addresses actively deal in FTT tokens.
One such operator is the FTX exchange itself which regularly buys FTT tokens from the market and thus spends 33% of the commissions received on the trading activity of its users.
The danger is that it’s a huge house of cards ready to descend upon the first big problem.
CZ’s words seem to confirm this hypothesis, even if a big problem came out yesterday and FTT price held.
environmental encryption system
If problems occur with FTX, the entire crypto ecosystem could be affected, as it did in June Celsius.
In other words, it’s not just about a company that may have more or less serious financial problems, it’s about the risk of a systemic collapse like the one that happened in June.
However, it must be remembered that although the June crash was indeed systemic, it was not a true total collapse.
The total crash was a percentage crash, so much so that the company then went bankrupt, but the cryptocurrency markets recovered after the crash.
This type of event is not very rare in the cryptocurrency markets. It has actually happened many times in the past, and although it caused quite strong tremors, it did not really undermine the existence of cryptocurrencies and the cryptocurrency markets.
Indeed, over the years both Bitcoin and Ethereum have shown great resilience even in the face of such shocking events, so much so that for example in 2018 ETH managed to recover from -95%.
Sam Bankman-Fried, aka SBF
Born in 1992, Sam Bankman-Fried is only 30 years old.
He became a business professional at the age of 21, and at the age of 25 he founded Alameda Research. Founded by cryptocurrency exchange FTX at the age of 27, she is not someone with decades of experience running large financial companies.
Moreover, he got rich so fast, that today he is one of the richest people in the world in cryptocurrency.
According to data compiled by Forbes and Bloomberg, his wealth mainly comes from the FTX exchange, rather than from his past trading activity.
Because of this, some speculate that he got rich thanks to accounting tricks that allowed his companies to create tokens from scratch, put only a portion of them on the market to guarantee they would get value and then use those that were kept aside as collateral for loans.
Although this is just a hypothesis, the accounting data on Alameda Research’s balance sheet actually points to a somewhat similar picture.
Potential bankruptcy of FTX
In such a scenario, if the market price of FTT tokens drops a lot, due to increased selling pressure The value of the loan collateral can, without consideration, be depreciated by a sufficient increase in buying pressure.
If at this point the creditors demand immediate repayment of the loans, the company may find it difficult to bear all the expenses, also precisely because of the fact that if I sell the FTTs in the market, it will only increase the collapse in their price.
However, the company declares that it is already sufficiently covered, thanks to hedging positions in derivative products, and therefore should be able to withstand any situation.
Furthermore, it also indicates that this data has been around for some time, so it seems at least odd that the problem seems to have exploded only yesterday.
But in fact, it was Binance, the competitor of FTX, that caused the problem to explode yesterday. It is not known if there is good blood between the two exchanges, but CZ’s words yesterday suggest that they have recently obtained information that may have outlined a rapidly evolving picture.