- The Department of Justice targets Binance entities over money laundering and enabling sanction evasion.
- FTX and Binance have a history of “bad blood.”
- FTX’s FTT token jumps as the industry takes stock of the situation.
Tensions have long simmered between FTX founder Sam ‘SBF’ Bankman-Fried and Binance’s Changpeng ‘CZ’ Zhao. Some believe Binance’s liquidation of its FTT token holdings, worth $529 million at the time, on rumors of FTX’s insolvency had triggered the crisis of confidence that led to the unraveling of the FTX exchange.
However, a year on, and the tables have turned with Binance now in the spotlight following Department of Justice (DoJ) allegations that Binance was complicit in money laundering activity and abetting sanction evasion. The stunning reversal of fortunes coincided with a massive 37% spike in the price of FTX’s native FTT token.
FTX’s FTT Sees Huge Price Jump
Following the DoJ’s enforcement action against Binance, FTX’s FTT token jumped 37% over the last 24 hours to $3.99 at the time of writing. Bullish momentum on November 22 had taken FTT to as high as $4.49 on the 11:00 UTC candle before profit-taking dipped the price lower.
Despite FTT’s impressive 24-hour performance, the token had already been trending higher since November 9, well before the Department of Justice’s intention to go after Binance was public knowledge.
On November 9, FTT opened the day at $1.34 spiking to a local top of $5.51 on November 10, representing a 310% increase. This surge coincided with Securities Exchange Commission chair Gary Gensler’s remarks about the possibility of FTX rebooting.
Still, revived optimism off the back of a potential reboot may not be enough to rectify the damage caused by FTX’s bankruptcy.
CZ and SBF Spat
FTX’s downfall accelerated in November 2022 when Binance publicly stated its intention to offload its 23 million FTT holdings over rumors the FTX exchange was insolvent. This was met with posturing on the part of FTX, including Alameda Research’s Caroline Ellison offering to buy the tokens at above market price.
However, the events triggered a $6 billion run on FTX which exposed the exchange’s vulnerabilities and the fraud that was operating behind the scenes. As the exchange signaled distress, Binance stepped forward as a potential buyer, later backing out after finalizing due diligence. Throughout this process, CZ and SBF were trading blows on social media, miring the event with additional drama.
Despite the long-running mismanagement and fraud at FTX, some blame CZ and Binance for the company’s downfall.
On the Flipside
- In contrast, Binance’s BNB token posted a 12% loss over the last 24 hours, at the time of writing.
- Binance’s legal woes stem from an aggressive pursuit of growth rather than deliberate fraud, according to 𝕏 account Pledditor.
- FTX has received judicial approval to liquidate recovered crypto assets, but it’s unclear if the SEC objects.
Why This Matters
The FTT price spike exemplifies how sensitive crypto token values are to regulatory risk. While this moment offers FTT holders some consolation, the ongoing FTX bankruptcy process remains uncertain.
Learn more about the significance of Binance’s settlement deal with the DoJ here:
Here’s What Binance’s $4B Settlement and CZ’s Resignation Means
Find out how the crypto community reacted to the DoJ’s enforcement actions here:
Binance Criminal Crackdown Riles up Claims of Oppression