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Despite the Binance lifeline call of wanting to acquire the token native to FTX Exchange, FTT still went into freefall and lost most of its value due to the worries of market participants regarding the crypto trading firm Alameda Research’s financial woes. Alameda and FTX are both owned by the billionaire Sam Bankman-Fried.
As of writing, as per the data from CoinGecko, FTT is now down to 80% and currently valued at $5.61, down from its price a day prior, which was at $18. The crash wiped out more than $2 billion in a day. It also fell by -93.4% from its $84.18 all-time-high value in September 2021.
With the concern of another “Three Arrows” event, Binance CEO Changpeng “CZ” Zhao, said on Tuesday Nov. 8 that his crypto exchange would be buying FTX.com to “help cover the liquidity crunch.” (Read more: What is Three Arrows Capital? Investment Firm Confirms Loss from Luna and Terra Collapse)
CZ also informed the crypto space that “There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real-time. Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop.”
In a tweet, Bankman-Fried expressed his gratitude towards CZ and his exchange noting that “This is a user-centric development that benefits the entire industry. CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world.”
Alameda Balance Sheet Issue
Priorly, CZ announced last Sunday their decision to liquidate their FTT holdings due to the Coindesk article regarding the balance sheet of Alameda Research revealing that the trading firm “rests on a foundation largely made up of a coin that a sister company (FTX) invented.”(Read more: Just House Cleaning: Binance To Liquidate Own FTX Tokens)
Binance received $2.1 billion FTT and BUSD–its native stablecoin– from FTX as part of its exit last year from an early equity position in the exchange since 2019.
To counter the possible market effect of this decision, Alameda CEO Caroline Ellison assured that their financial foundation is stronger than what the balance sheet tried to reflect and offered to buy Binance FTT token holdings for $22 each.
Regarding these concerns, Bankman-Fried assured in a tweet that “FTX is fine. Assets are fine.”
“It’s heavily regulated, even when that slows us down. We have GAAP audits, with > $1b excess cash. We have a long history of safeguarding client assets, and that remains true today,” he explained.
This article is published on BitPinas: FTX Token Price Drops 80% as News of Binance Buying FTX Surface
Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.