In the ongoing battle between the crypto exchange giants, Binance and FTX, the latter appears to have taken the bigger hit.
The price of FTT, its native cryptocurrency, has somersaulted overnight and continues to sink, even at the time of writing. Even though Binance shook up the market with the news of acquiring FTX crypto exchange the same couldn't do much for MATIC prices.
According to reports, Zhao announced that Binance would liquidate its entire FTX holdings. Zhao made this announcement in response to weeks of criticism of Sam Bankman-Fried, the founder and CEO of FTX, for regulatory ideas he put up in a blog post that suggested limitations on Defi.
Following this announcement from Binance, mass withdrawals from the FTX exchange have ensued, with a record $451 million in stablecoin leaving the exchange over a weekly perspective, according to data from Nansen.ai.
It is also interesting to note that while FTX has witnessed stablecoin outflows of about $451 million, Binance has seen net inflows of about $411 million over the same period.
According to the blockchain analysis platform, PeckShield, some of these stablecoin withdrawals from FTX were executed by Jump Trading, the proprietary trading firm. PeckShield notes that Jump Trading transferred $40.4 million worth of USDC from FTX over the last day.
The price of the cryptocurrency FTT has tanked 74% over the last day and reached lows of $4.75. On 7 November, the cryptocurrency price stabilized around the $22 mark but began to descend again at the time of writing.
FTT currently trades at $4.83 and dropped 81% from its all-time high of $84 in September 2021.
According to reporter and journalist Colin Wu, over 1.9 million FTT tokens worth about $44 million have been transferred from the Genesis OTC Desk to FTX.
Wu also notes that FTT abruptly declined 14% in an hour, and SOL dropped 14% in a day. 1.9 million FTT ($44 million) was also transferred from The Genesis OTC Desk to FTX in the same period. However, CZ has maintained that Binance was not the seller.
Binance has also added that they are not responsible for the mass selloffs of FTT and that selling off their FTX holdings would take months due to liquidity issues and market conditions.
In a tweet, CZ said "Funny memes, media & some people tried to color this as a 'fight'. Sorry to disappoint, but I spend my energy building, not fighting."
According to a tweet from Alex Valaitis, the founder of W3T Inc, Binance and FTT's CEOs are "officially at war." Valaitis goes on to say that this conflict has been brewing since 2019.
When FTX first started in 2019, Binance invested in it. In the years that followed, the SBF-founded exchange expanded rapidly.
In 2021, Binance decided to sell its FTX holdings during its $900 million financing round.
It is important to note that SBF, the CEO of FTX, is a significant donor to political campaigns that has pledged approximately $40 million to Democratic candidates and their campaign efforts in the present electoral cycle.
According to Valaitis, several events left FTX and SBF vulnerable to attack by Binance and CZ, and Bankman-Fried was an obvious target because he suggested the regulation of Defi.
Valaitis notes that CZ's "attack" on FTX is expected to have two effects:
One is that it would characterize FTX as anti-crypto and contribute to the FUD narratives surrounding FTX's insolvency. The other is that it would enable Binance to sell its tokens and significantly weaken the price and position of FTT.
At the same time, CZ may have confirmed that the recent moves by Binance may have been an attack of sorts via a tweet.
In this tweet, he says that Binance liquidating its FTT is just a post-exit risk management strategy "learning from LUNA."
CZ goes further to say that Binance has supported FTX before but won't pretend to "make love after divorce".
CZ ends the tweet by saying that Binance is not against anyone. At the same time, the firm will not endorse individuals who "work behind the scenes to lobby against other business players".
But all that seemed to be a thing of the past when CZ tweeted yesterday that they are in the process of acquiring FTX.
The current FTT collapse suggests that the 2022 crypto bear market is far from over. The overall market is also reacting, with a 6% drop in market cap at the time of writing.
Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.