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CZ orders liquidation of FTT holdings ‘due to recent revelations’ after bust-up with SBF and insolvency rumours

City AM logo City AM 07/11/2022 Darren Parkin

Photo via Twitter © Provided by City AM Photo via Twitter

Binance chief Changpeng ‘CZ’ Zhao has ordered the liquidation of almost $600 million of FTX tokens following arguments with the rival exchange’s CEO Sam Bankman-Fried.

The pair clashed over Bankman-Fried’s comments surrounding how the global cryptocurrency industry should be regulated. The Twitter spat even stirred up rumours of insolvency surrounding SBF’s trading company Alameda Research when leaked accounts showed liabilities worth $8 billion largely made up of unidentified loans.

Californian entrepreneur Bankman-Fried founded crypto exchange FTX and its native FTT token three years ago in the Bahamas. A year later, FTX penned a $195m deal for the naming rights of the Miami Heat basketball stadium which, in 2021, became the FTX Stadium.

Soon after, NFL Hall of Fame legend Tom Brady became an FTX ambassador as both he and wife Gisele Bündchen took equity stakes in FTX.

However, claims that all is not well with Bankman-Fried’s balance sheets – coupled with the 30-year-old wading in on regulation – appear to have triggered a potentially explosive fallout that could have far-reaching consequences for crypto.

SBF felt a backlash from the industry after suggesting practically everyone involved in the provision of cryptocurrencies should be registered as a financial brokerage. Such a monumental shift would lead to a massive and expensive upheaval in know-your-customer (KYC) procedures.

Together with rumblings over Alameda’s books, it appears CZ felt there was no option other than liquidating its FTT holdings in what the CEO described as “post-exit risk management”.

Over the weekend, Alameda CEO Caroline Ellison hit back, claiming there were $10 billion in assets that had not been represented on the leaked accounting document. She also stressed there were a number of hedges in place, and many of the loans had already been paid off.

Her words clearly fell on deaf ears as, yesterday, Changpeng Zhao firmly made Binance’s stance clear in no uncertain terms. The 45-year-old even referenced the recent multi-billion dollar Terra/Luna collapse.

He explained that, as part of Binance’s exit from FTX equity last year, the exchange received roughly $2.1 billion equivalent in cash (BUSD and FTT), adding “due to recent revelations” he had taken the decision to liquidate any remaining FTT.

“We will try to do so in a way that minimises market impact,” he said.

“Due to market conditions and limited liquidity, we expect this will take a few months to complete.

“Binance always encourages collaboration between industry players. Regarding any speculation as to whether this is a move against a competitor, it is not. Our industry is in its nascency and every time a project publicly fails it hurts every user and every platform.

“We typically hold tokens for the long term. And we have held on to this token for this long. We stay transparent with our actions.”

A few hours later, the Binance boss took to social media again, saying: “Liquidating our FTT is just post-exit risk management, learning from LUNA. 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. Onwards.”

The post CZ orders liquidation of FTT holdings ‘due to recent revelations’ after bust-up with SBF and insolvency rumours appeared first on CityAM.

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