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The clash of two crypto titans adds another problem in an industry plagued by scandals.

Two of the biggest cryptocurrency exchanges spent the weekend feuding. As it happens, it all started with a tweet.

On Nov. 6, Changpeng Zhao, widely known as “CZ,” cryptically tweeted that “due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books,” referring to the token issued by rival crypto exchange FTX. Zhao did not elaborate on what these revelations were.

Binance had received around $2.1 billion equivalent in cash (coins BUSD and FTT) after its exit from FTX equity last year, Zhao said. The company held 23 million FTT tokens, worth about $529 million based on its current price, Bloomberg reported, citing people familiar with the matter.

The FTT tokens will be offloaded over a few months “in a way that minimizes market impact,” he added. But the impact is already being felt across the troubled crypto world.

The problem with FTT

Concerns around the health of FTT tokens have been mounting since the books of trading firm Alameda Research’s books were scrutinized. Its balance sheet is full of FTT, according to a Nov. 2 Coindesk report. While that’s not independently worrying, there’s one detail that changes things. Alameda and FTX have one thing, or rather, a person, in common: Samuel Bankman-Fried, (known as SBF). The trading firm and crypto exchange are both his.

Instead of Alameda’s success hinging on a fiat currency or another cryptocoin, it’s heavily reliant on its sister company. Of the company’s $14.6 billion worth of assets as of June 30, “unlocked FTT” was the biggest at $3.66 billion and “FTT collateral” was the third biggest at $2.16 billion. In its $8 billion liabilities, there’s $292 million of “locked FTT,” crypto publication CoinDesk pointed out.

These questions around Alameda’s insolvency could be what drove Zhao’s decision. Zhao himself said he was “learning from LUNA,” referring to the Terra-Luna crash that shook the crypto world. The situation brewing is also reminiscent of the kind of thing that made crypto-lending firm Celsius Network go bankrupt.

Did Samuel Bankman-Fried make things worse?

It didn’t help that the Alameda financials were laid bare days after Bankman-Fried was facing heavy backlash from the industry for suggesting regulatory tactics that would essentially kill DeFi. Decentralized finance refers to automated, blockchain-based offerings for financial services like insurance, loans, and more.

“The public damage for Sam was immense. Sentiment shifted as people realised his intentions may be different from what was first thought,” crypto analyst Miles Deutscher explained in a Twitter thread.

Zhao also took a dig at the young billionaire, who is a keen political donor: “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,” he said.

SBF’s Alameda and FTX are “fine”

SBF fought back against the competitor’s concerns in a tweet stating “FTX is fine. Assets are fine.” In another post, he added, “FTX has enough to cover all client holdings,” he added. “We don’t invest in client assets (even in Treasurys). We have been processing all withdrawals, and will continue to be.”

In a tweet on Nov. 7, crypto hedge fund Alameda’s chief Caroline Ellison said the information “that has been circulating recently” referred to a “specific balance sheet…for a subset of our corporate entities” and that the firm has more than $10 billion of assets that were not reflected in it. An hour later, Ellison responded to Zhao’s tweet, offering to buy the FTT tokens from Binance at $22. But Zhao rejected the offer.

Quotable: Binance-FTX war is bad for the industry

“Whether this blows over quickly or not remains to be seen. But regardless of how it ends, it’s another blow against the industry (and financial institutions in general) simply for a lack of voluntary transparency, but it’s another giant check mark for the transparency of blockchain data and the skilled researchers trained to uncover, read, and interpret this data,” —Jeff Dorman, chief investment officer at crypto hedge fund Arca

Why the Binance selloff matters

Binance is an industry leader with the power to pacify or spook. Although Zhao maintains Binance was being “transparent” by disclosing its FTT position, and he spends his energy “building, not fighting,” his move will have a ripple effect—it already has.

The brewing mess prompted BitDAO, one of the largest decentralized autonomous organizations (DAO), to ask Alameda for “proof of fund” on Nov. 8. Ellison responded “it wasn’t us” and said she’d get back with proof once things calm down.

Sequoia-backed Flint, which has a sizeable user base in India, moved its funds out of FTX

Charted: FTT’s crash

Hovering around $18, FTT price was down more than 20% on Nov. 8. The massive selloff could cause it to plummet over 30%.


Bhattacharya, Ananya. Binance’s selloff of FTX tokens risks crippling the struggling crypto industry. 8 Nov, 2022,