Binance CEO Changpeng Zhao (CZ) sparked a Twitter war after announcing the company would liquidate its FTX token holdings. The decision to Binance’s position in FTT (FTX’s native token) is “risk management” after Alameda Research documents leaked. Alameda Research is Sam Bankman-Fried’s (SBF, FTX founder, and CEO) crypto trading firm. The leaked documents revealed an unusually large chunk of Alameda’s assets is FTX’s native token. FTX halted withdrawals from the platform amid the controversy.
Binance compares FTX to the LUNA disaster.
The Twitter war started when Zhao compared Alameda’s position in FTT to the LUNA stablecoin disaster. The collapse of the dollar-pegged stablecoin in May sent the cryptocurrency market tumbling, wiping out $60 billion in the process. “Liquidating our FTT is just post-exit risk management, learning from LUNA,” Zheng tweeted. “[…] We are not against anyone. But we won’t support people who lobby against other industry players behind their backs. Onwards.”
Sam Bankman-Fried quickly responded to the stirring controversy on the social media platform to reassure everyone that FTX is fine. But unfortunately, the uncertainty surrounding the coin caused it to plummet by over 20% in the following hours.
CoinDesk compares fears of an Alameda Research meltdown to the collapse of Three Arrows Capital earlier this year. The FUD sparked a sell-off that wiped over $450 million from FTX over the last week. Though it’s been surprisingly stable recently, the notoriously volatile cryptocurrency market saw bitcoin and ether slip as FTT collateral damage.
FTX stopped processing withdrawals amid the controversy.
In the aftermath of the controversy, The Block reports FTX has briefly stopped processing withdrawals. The stoppage comes after complaints of slow transactions on the platform. And naturally, users compare the stoppage to the likes of the now-bankrupt Celsius crypto exchange before its untimely demise.
Despite the current uncertainty, SBF says FTX has enough liquid assets to cover all client holdings. Additionally, Alameda Research CEO Carolina Ellison said the leaked balance sheet only shows a portion of the company’s assets. At publication, FTX and Sam Bankman-Fried have yet to address the withdrawal stoppage.