Citing bankruptcy rumors, Binance decided to sell its FTT, the parent token of FTX. Enough to weaken a serious competitor and set yourself up a bit more like the next crypto blunder.
Weeks go by and are never the same for Sam Bankman-Fried. As we recently dedicated an article about what we call SBF and for his empire, everything changed in a matter of hours. We really didn’t leave to remind you that everything can go very quickly in Web3.
While everything seemed to be working perfectly for Bankman-Fried and FTX, a article from CoinDesk, a specialized Web3 website, came to stir up trouble. He is particularly interested in stocks held by Alameda Research, the Investment Funds crypto by Sam Bankman-Fried.
However, the funds held by Alameda would be mainly FTT, the native token of the exchange platform FTX… owned by SBF. Beyond the problematic nature of this internal guarantee to which we will return, Alameda has funded many projects and some already fear a new Celsius Network episode. However, this case is above all a fight launched by Binance against its most visible competitor.
The reason: bankruptcy rumors about FTX
FTT token at the heart of a dispute between Binance and FTX
Let’s be clear now: as of this writing, FTX is not bankrupt. The company could not go from a good financial condition to bankruptcy in a matter of days. However, stay tuned, as things can change quite quickly in this industry.
FTT is the token at the heart of the battle between Binance and FTX. As of June 30, Alameda Research had $14.6 billion in reserves. However, a third of the reserves are represented by the FTT.
Therefore, bankruptcy rumors are related to the flow of FTT. If the latter ever suffers a significant decline, Alameda’s available funds will be reduced. Of course, the company is not the only one that has a significant part of its money represented by volatile assets. But until the CoinDesk article, no one really knew about the reality of Alameda’s reserves.
Finally it was FTX’s biggest competitor, Binance, who decided to weaken it by taking a drastic decision.
A pitched battle between Binance and FTX
Four days after Alameda Research’s discovery of the reserve, Changpeng Zhao, CEO of Binance, said the exchange was liquidating its entire FTT position. The amount would be nearly FTT 23 million, or more than $580 million at the time of the transfer.
FTT’s price subsequently fell sharply, raising fears about Alameda Research’s short-term solvency. Hence, Binance voluntarily undermined its competitor based purely on rumours. In any case, this is how SBF responded, emphasizing the fact that FTX is regulated and that the funds are audited.
However, Changpeng Zhao is right to be cautious. of analytics run on Twitter on the authenticity of the funds held by Alameda. FTX would issue FTT to Alameda for the sole purpose of increasing its cash. Purpose? Raise funds from other investors. This technique was the one used by Celsius. We know the end of the story. Therefore, we better understand why Binance has left FTT.
Moreover, this battle may make a collateral victim: Solana (SOL). Indeed, Alameda owns over $800 million in SOL, Solana’s token. If Alameda and FTX sink, Solana will also sink.
The likely consequence: an ultra-dominance of Binance
An implied will to kill FTX?
For Sam Bankman-Fried, the will of Binance and Changpeng Zhao is clear: kill FTX and make a problematic competitor disappear. It’s hard to blame him for that. Zhao took the opportunity to weaken FTX and SBF. He even justified the liquidation of Binance’s position in FTT to not be part of one new case Terra (LUNA).
Therefore Changpeng Zhao did everything to discredit, in the eyes of everyone, the empire of Sam Bankman-Fried. The adversary’s defenses seem ineffective against the popular Binance steamer. But that’s not the worst. Indeed, Binance really seems to have the tools to sink FTX and Alameda Research.
Of course, Binance cannot do this directly. But now, Changpeng Zhao knows that the SBF empire is not as strong as advertised. Thus, there would only be 300 million in stable currency reserves. This is very little to compensate for, for example, the mass sale of FTT with a the whale. And that’s exactly what happened to Terra, when a whale liquidated a very large position in UST, the stable currency of the extinct ecosystem.
The fall of Sam Bankman-Fried’s empire would be a massive blow to the Web3 ecosystem, far worse than Terra’s. Not to mention FTX’s considerable sponsorship in the world of sports, which would also suffer the consequences. But there would be one winner: Binance.
A clear desire to put Web3 under guardianship
We’ve known it for several years: the crypto ecosystem always rises from its ashes. Although a collapse of FTX and Alameda Research would have dire consequences, the industry would recover in the long run. And I don’t need to give you the name of the potential winner.
Without mentioning the fact that Binance is right or wrong, the exchange platform no longer hides its ambitions on Web3 and even beyond. Recently, Zhao also mentioned his desire to buy all or part of a traditional bank. Therefore, Binance would like to become a crypto-bank, in addition to already being the largest crypto exchange platform in the world.
In addition, for several months, Binance has set its sights on regulatory authorities. L’obtaining PSAN in France, discussions with Bahrain to get a banking license and other meetings here and there have made Binance a company everyone listens to. Regulators have faith and the platform has long proven that there is little to worry about financially.
Ultimately, there is a good chance that Binance will be the first Gafam in Web3 history. Unless it already is.