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Binance to Liquidate FTX Token Holdings Following a Balance Sheet Report on FTX’s Sister Company

Speculation about the financial position of the Sam Bankman-Fried backed companies FTX and Alameda Research has led to Binance dumping its FTT and shaken the value of the crypto tokens. 

On November 7, Binance CEO Changpeng “CZ” Zhao tweeted that the company would liquidate the FTT it holds “due to recent revelations that have came to light…” and would aim to avoid impacting the market.

Those “revelations” arise from a recent report by CoinDesk that raised concerns about the ties between Sam Bankman-Fried’s two companies and how Alameda Research’s financials indicate its biggest asset is unlocked FTT.

FTX Financial Concerns “Unfounded”: SBF 

CEO of trading firm Alameda Research, Caroline Ellison, claimed on Twitter that the balance sheet that sparked the concern was incomplete and did not reflect more than $10 billion of assets held by the company. 

FTX founder and CEO of crypto exchange FTX, Sam Bankman-Fried took to Twitter to thank supporters and especially “those who stay level headed during crazy times” in light of what he describes as the “unfounded rumours” circulating. 

In his tweet about liquidating Binance’s FTT tokens, CZ Zhao said Binance encouraged industry collaboration and had no intent to hurt users or other platforms, stating: “Regarding any speculation as to whether this is a move against a competitor, it is not.”

The taint of scandal has already had an impact, with FTT down more than 12 percent in the past seven days, currently trading at $22.35. Many social media users are wary of the token’s collapse.

Bankman-Fried said the exchange would keep going:

“And in the end you should do what you want, and trade where you want.  We’re grateful to those who stay; and when this blows over we’ll welcome everyone else back.”

Sam Bankman-Fried, FTX CEO
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Crypto Exchange FTX Markets Terra Tether

FTX Founder ‘SBF’ Warns Some Crypto Exchanges Are ‘Already Insolvent’

One of the richest men in crypto, 30-year-old FTX founder and CEO Sam Bankman-Fried (also known as SBF), has warned that some “third-tier” crypto exchanges are already secretly insolvent.

Among his recent comments to Forbes, SBF declined to name which exchanges he believes are currently broke. However, his warning comes as the fallout from the May collapse of the Terra blockchain continues to wreak havoc across the crypto market, with the highly Terra LUNA-exposed Singapore-based venture capital firm Three Arrows Capital (3AC) recently announcing it’s nearing insolvency.

SBF Bails Out Struggling Firms

As a result of 3AC’s insolvency issues, fellow crypto-focused firms BlockFi and Voyager Capital – which had each given 3AC sizeable loans – also found themselves in treacherous financial waters. 

Fortunately for these firms, SBF swooped in, through his exchange FTX and trading firm Alameda Capital, to provide US$250 million in credit to prop them up and protect their customers’ funds.

Speaking to Forbes about the credit infusion SBF said, “ … You know, we’re willing to do a somewhat bad deal here, if that’s what it takes to sort of stabilise things and protect customers.” 

Of course, stabilising the crypto market and seeing it grow is also very much in SBF’s interest – his US$20.5 billion fortune is closely tied to the performance of the crypto market.

It has also recently emerged that SBF may be looking to go beyond simply providing credit to BlockFi, with reports suggesting he is now in talks to acquire the New York-based firm.

SBF Expects to See Numerous Exchanges Fail

Despite his willingness to prop up some ailing crypto firms, SBF doesn’t anticipate this generosity being applied indiscriminately across the industry. Talking to Forbes, SBF said there were companies throughout the crypto industry that were beyond saving:

There are companies that are basically too far gone and it’s not practical to backstop them for reasons like a substantial hole in the balance sheet, regulatory issues, or that there is not much of a business left to be saved. 

Sam Bankman-Fried, founder, FTX 

Tether Won’t Collapse

One much-maligned digital asset SBF has no fears for is crypto’s largest stablecoin, Tether (USDT). While many consider the collapse of the US$70 billion stablecoin is inevitable due to its reportedly less than ideal collateral situation, SBF claims there’s no reason to worry, saying: “I think that the really bearish views on Tether are wrong … I don’t think there is any evidence to support them.”

In other SBF news, the crypto magnate declared on a podcast last month that he was willing to donate up to US$1 billion to the US Democratic Party to keep Donald Trump from returning to the White House.