- Binance CEO orders liquidation of $584 million FTT in retaliation for FTX CEO’s comments.
- Samuel Bankman-Fried, the CEO of FTX exchange stoked the ire of Binance’s chief with controversial regulatory proposals regarding DeFi.
- FTT price declined 13% week on week and the token is in a steady downtrend.
Binance CEO Changpeng Zhao (CZ) and FTX’s Samuel Bankman-Fried have locked horns over how cryptocurrencies should be regulated. The war of words entered the financial realm after CZ announced the mass liquidation of Binance’s holdings of FTX’s native token FTT.
Binance liquidates FTT holdings, native token price declines
Binance, the world’s largest exchange by trade volume, liquidated $584 million in FTX exchange’s native token FTT in retaliation over comments made by Samuel Bankman-Fried, FTX exchange CEO about how the crypto and DeFi industry should bem regulated.
In October 2022, Sam Bankman-Fried directed regulators towards decentralized finance products and platforms but the crypto community criticized the CEO of FTX for his blueprint for regulatory oversight and industry standards addressing DeFi. He proposed that DeFi front-end providers, website hosts and even related marketers be required to register as traditional financial brokerages.
The implication of such a classification would subject DeFi users to Know Your Customer procedures and require enormous capital expenditure and resources. Opponents argue that since decentralized finance is currently self-regulated, any intervention from authorities could be considered redundant at best. Further, they say that ironically, it is centralized platforms and their opaque operations that require regulation the most.
CZ told his followers on Twitter that Binance is liquidating its holdings and it is a “post-exit risk management” move. CZ argues that after learning from the Terra collapse, Binance won’t support people who lobby against other industry players. Therefore, $584 million in FTT was liquidated by the exchange.
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4— CZ Binance (@cz_binance) November 6, 2022
Binance, which previously owned a stake in FTX, exited from its position in 2021, receiving roughly $2.1 billion equivalent in a cash payout (BUSD and FTT). Due to the recent developments, the exchange decided to liquidate the FTT remaining on its books.
CZ announced that Binance wants to liquidate in a way that minimizes the market impact. Due to market conditions and limited liquidity, this will take a few months to complete. Binance always encourages collaboration between industry players and accordingly views FTX CEO’s move as potentially hurting the industry in the long term. As a result, Binance wants to wash its hands off the exchange’s native token.
FTT price in free fall
The debate between crypto influencers and the war waged by SBF against DeFi has adversely affected FTT price. The native token’s price plummeted 13% in the past week. The top 50 holders of FTT hold a total of 322.72 million tokens, accounting for $7.44 million, 98.12% of the total supply. FTT is highly concentrated in a small number of addresses.
FTT concentration in small number of addresses
Analysts at Lookonchain believe FTT’s high concentration in whale wallets could result in a massive crash in the token’s price once large wallet investors exit. Analysts have set a target of $9 for FTX exchange’s native token.
FTTUSD price chart
CapoOfCrypto, analyst and trader believes FTT price could decline to the $9 level. Since reserves of FTT across exchanges have a direct impact on price, the token is likely to crumble under selling pressure from key players like Binance and FTT whales.
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