- The reserves of FTX Ethereum (ETH) have plummeted to their lowest since November 2020.
- FTX has been receiving funds from Alameda Research in the form of Ethereum and stablecoins.
- The latest development coincides with Binance CEO CZ’s announcement that they will dump FTX FTT tokens.
- CZ defended the move, saying it was not an attack on a competitor.
- The market is increasingly concerned that this may cause a death spiral similar to Terra-Luna’s in May.
As per emerging indications from CryptoQuant, FTX Ethereum (ETH) reserves have plummeted to their lowest level since November 2020. The report indicates that the ETH reserves went down by almost 300,000 in two days. Currently, FTX ETH reserves remain at 108,246.43.
In response, Nansen data shows how 26,600 ETH were sent from Alameda to FTX—leaving its remaining balance of 9,325 ETH.
It is worth noting that crypto billionaire Sam Bankman-Fried has holdings in both Alameda Research and FTX exchange. The latest development coincides with Binance’s announcement that they will dump FTX FTT tokens.
FTX Could Suffer a Huge Crisis if Binance Sells its FTT Holding
Last night, Binance CEO Changpeng Zhao (CZ) announced Binance’s desire to sell FTT tokens on its balance sheet, arguing that the exchange wouldn’t support “people who lobby against other industry players.”
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.— CZ 🔶 Binance (@cz_binance) November 6, 2022
Nevertheless, CZ denied that the move was an attack against a competitor and pointed out that when a project publically fails, it hurts every platform and every user.
The recent occurrences could have a negative impact on FTX. This is because most of FTX’s crypto holdings are attached to the FTT token at around $14 billion. So, a dip in the price would possibly reduce FTX’s holding substantially.
There are emerging fears this may cause a death spiral like that of Terra-Luna that brought down the whole market in May.
However, the Binance CEO stated that actions would be taken to minimize the market impact, and selling would take place over the next few months. Last year, Binance received about $2.1 billion in BUSD and FTT as part of its exit from FTX equity.
The actions of Binance and its CEO generated a response from Alameda Research CEO Caroline Ellison, who offered to buy Changpeng Zhao holdings of FTT at $22 per one.
Ellison submitted that Alameda has more than $10 billion in assets in its reserves. He established that the figures were not included in the reports that emanated. FTT currently trades at $22.23, down by more than 15% from its 48h high of $25.78.
On the Flipside
- The news about possible insolvency does not bother Sam Bankman-Fried, as he thinks the recent news is based on “false rumours” and affirmed that FTX has enough funds to cover all the client’s holdings.
1) A competitor is trying to go after us with false rumors.— SBF (@SBF_FTX) November 7, 2022
FTX is fine. Assets are fine.
Why You Should Care
There is a possibility that the recent development may lead to yet another death spiral, similar to the Luna fiasco last May. Just as a recession is on the horizon, this may bring down the entire crypto market.