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FTT Token Sale Announced by Binance’s CZ

FTT Divestment Strategy by Binance’s CZ Sparks Market Stir

FTT, the native token of the cryptocurrency exchange FTX, is at the center of a new development as Binance’s CEO, Changpeng Zhao (CZ), commits to a phased sell-off of all Binance-held FTT. This decision has escalated tensions between the two trading platforms, leading to what many are calling an “exchange war,” despite denials from both parties. The situation heated up following a series of tweets by CZ, outlining his plans and the reasons behind them.

The complete Twitter thread can be found below:

As indicated, CZ took to Twitter to announce the liquidation of their entire FTT position, drawing from their experiences with LUNA.

So, why was CZ concerned? What were the rumors?

Sam Bankman-Fried was once highly respected in this sphere for his notable successful investments such as Solana (SOL), diverse arbitrage trading, and notably, founding both FTX, one of the largest centralized cryptocurrency exchanges globally, and Alameda Research.

Moreover, throughout 2022, Sam and FTX spearheaded substantial fundraising endeavors for new projects, including supporting a $150 million fundraising for Aptos and a $300 million fundraising for Sui. This extended to his efforts to rescue projects affected by the LUNA market collapse, bailing out BlockFi for $240 million, expressing interest in Voyager’s assets, and contemplating bailing out Celsius.

However, recent events indicated cracks beginning to show. Abruptly, co-CEO of Alameda Research, Sam Trabucco, stepped down from his role:

Additionally, a few weeks later, Brett Harrison, president of FTX, announced his resignation:

This occurred around the time when FTX faced scrutiny from securities regulators, examining whether crypto-earn offerings constituted securities, and Texas authorities stating FTX should not acquire Voyager assets.

However, the revelation of Sam’s underlying intentions truly sparked the current atmosphere of Fear, Uncertainty, and Doubt (FUD).

A draft of the Digital Commodities Consumer Protection Act (DCCPA), outlining the Commodities Futures Trading Commission’s proposed crypto industry regulation, surfaced on GitHub, with indications of Sam’s support for the bill.

This sparked significant backlash, with figures like BitBoy on Twitter exclaiming, “he’s coming after DeFi and Peer to Peer transactions.” Erik Voorhees’ interview with Sam on the matter led to intense scrutiny within the cryptocurrency community, tarnishing Sam’s reputation, which, coupled with earlier events, triggered widespread FUD around FTT and FTX.

Tensions escalated last Wednesday when Alameda’s balance sheet revealed that “the net equity in the Alameda business is actually FTX’s own centrally controlled and printed-out-of-thin-air token,” as described by Cory Klippsten.

Division in Sam Bankman Fried Crypto Empire Blur in FTT

This triggered the FUD spiral. Allegations of FTX insolvency emerged, with concerns arising from the balance sheet review suggesting potential insolvency for Alameda as well.

The tipping point arrived when a massive $584 million worth of FTT tokens were transferred to Binance, in which CZ confirmed Binance’s intention to liquidate its position. CZ indirectly referenced Sam’s lobbying, stating that he “won’t support people who lobby against other industry players behind their backs.”

Consequently, FTT experienced a drop in the past week, declining from around $26.5 to $22.17 as of writing, marking a roughly 16% decrease.

As a response, Sam took to defending himself in this thread:

This situation is rife with rumors, though where there’s smoke, there’s usually fire, as evidenced by the 2022 capitulation events involving LUNA, Celsius, Voyager, and others.

The likelihood of FTX being insolvent is very low overall. However, given the smoke, caution must prevail in the space.

Let’s hope for the betterment of the cryptocurrency and blockchain space that this situation doesn’t escalate further!

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