Is Justin Sun's TRON empire a collateral in the FTX vs. Binance crypto war?


Share:
  • Sam Bankman-Fried has allegedly waged a war against Binance by attempting to engineer a depeg of a stablecoin the exchange owns en masse. 
  • Experts allege SBF’s Alameda research attempted to depeg USD Tether as payback for rival Binance which holds nearly $18B USDT.
  • While USDD suffers depeg, Tron Founder Justin Sun told followers that his team is working on a plan to rescue FTX from the liquidity crisis. 

Crypto experts have accused the owner of troubled crypto exchange FTX, Sam Bankman-Fried (SBF), of triggering a depeg in Tron network’s stablecoin USDD as revenge against rival exchange Binance which owns a large holding of the stablecoin. 

The allegations form the latest twist in the FTX-Binance conflict, which began with Binance  allegedly triggering a run on FTX by dumping $584 million of its native token FTT, after FTX’s owner SBF’s views on crypto regulation stoked the ire of Binance CEO Changpeng Zhao (CZ). 

Experts on crypto Twitter speculate that the USDT depeg, a drop of $0.03 from $1 parity, was triggered by a slew of liquidations by SBF’s trading arm Alameda Research. This was followed by the news that Justin Sun, the founder of Tron, stepped in to bail FTX out to re-establish USDD’s $1 parity. 

Sun announced earlier today, that his team is working on bailing FTX out of its crisis and protecting Tron (TRX), BitTorrent (BTT), Just (JST), Sun Token (SUN) and Huobi Token (HT) holders on the exchange. 

Also read: Leaked chats confirm FTX in talks with Justin Sun, Binance 'never planned to go with the deal'

FTX v. Binance war, everything you need to know

A difference of opinion on crypto regulation between two rival exchange CEOs resulted in a full-blown war between Binance and FTX. While Samuel Bankman-Fried has been critiqued for his stance on DeFi and his move to turn regulators towards decentralized finance, CZ has been accused of being the mastermind behind the FTT collapse, the native token of the FTX exchange. 

A bitter Twitter exchange between the two CEOs was followed by Binance’s risk-management decision to sell $584 million worth of FTT tokens in the open market. This resulted in a collapse of FTX’s native token, with FTT price declining from $22 to $2.74 within 48 hours. 

The open market sale devastated FTT holders, at the same time, SBF worked hard to defend FTX’s native token’s price as the exchange holds it on its balance sheet. As FTT token’s price cratered, SBF sold several other assets held by his trading fund Alameda research to buy FTT tokens back and stabilize the price. 

The buy back strategy failed, however, and the value of FTT tanked 90% in less than a week. SBF discovered that his liabilities now exceeded his assets and the FTX exchange faced insolvency. 

Alameda Research shorted USDT to get back at Binance

On-chain analysts are now watching every move made by Samuel Bankman-Fried’s Alameda Research and the FTX exchange to predict future market moves. HsakaTrades, a crypto analyst on Twitter believes that the entire crypto market seems to be in the grasp of Alameda. 

Hsaka identified an on-chain transaction in which Alameda shorted USDT in three steps. The trading fund is supplying USD Coin (USDC) on Aave, borrowing Tether and swapping it back to USDC on Curve. 

On-chain evidence of this transaction has been logged on Etherscan

On-chain evidence of this transaction has been logged on Etherscan

Evidence of Alameda Research’s USDT short

Web3 developer Jesse Hynes accused Alameda of shorting USDT in a tactic to hurt Binance since the rival exchange holds 17.6 million of Tether on its books. Binance disclosed its exchange balances in hot and cold wallets:

BTC: 475,000 

BNB: 58 million

ETH: 4.8 million 

USDT: 17.6 billion 

BUSD: 21.7 billion 

USDC: 601 million

According to Hsaka Alameda’s objective is not to depeg USDT, but to sell the stablecoin post a squeeze and book profits through algorithmic trades. The $250,000 worth of USDC kicked off the process, a depeg in the largest stablecoin would generate fear and traders would react, pushing USDT pairs higher. 

The expert explains the trade and his speculation in this tweet:

USDD suffers depeg in SBF’s war to recover lost billions

Justin Sun’s Tron network has a stablecoin USDD. The stablecoin suffered a depeg, sliding down from its $1 parity to $0.97 and raising concern among traders in the crypto ecosystem. The price drop started before Justin Sun’s announcement to put together a plan to help bail out FTX exchange and protect Tron ecosystem token holders. 

Tron’s stablecoin is currently exchanging hands at $0.97 and struggling to re-establish its peg. Justin Sun speculated that the USDD depeg is a result of Alameda Research offloading it in large volumes. USDD price is crumbling under selling pressure and failed to hit the $1 level in the last 24 hours. 

USDD price chart

USDD price chart 

Justin Sun’s announcement to tackle FTX’s liquidity crisis was void of detail. Since the tweet, USDD has ranged between $0.973 and $0.975. This leads crypto traders and experts to the question whether Tron’s USDD is a collateral in the cryptocurrency war between Binance and FTX. 

Disclaimer: FXStreet has reached out to FTX exchange to get an official statement about the recent developments, but it has yet to hear back. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

Cardano network’s Charles Hoskinson warns traders against AI token scams ahead of Apple developer conference

Cardano network’s Charles Hoskinson warns traders against AI token scams ahead of Apple developer conference

Charles Hoskinson, the founder of Cardano, has warned the crypto trading community against scams. With market participants watching the upcoming Apple 2023 WWDC lined up for Monday, there is a rally in artificial intelligence-based (AI) tokens.

More Cardano News

Terra LUNA Classic price on the rise as Montenegro court approves Do Kwon’s second bail request

Terra LUNA Classic price on the rise as Montenegro court approves Do Kwon’s second bail request

Terra LUNA Classic price yielded double-digit gains overnight for holders. LUNC price rallied in response to the recent development in Do Kwon’s bail request. The next hearing in Kwon’s case is June 16. 

More Luna Classic News

Pro-XRP attorney says Ripple has 25% chance of winning against SEC, Judge could announce verdict by September

Pro-XRP attorney says Ripple has 25% chance of winning against SEC, Judge could announce verdict by September

Ripple has a 25% chance of winning its legal battle against  the US Securities & Exchange Commission (SEC), according to pro-XRP attorney John Deaton. Over the weekend, Deaton shared his opinion on Ripple’s likelihood of both an outright win and a partial victory. 

More Ripple News

Why Solana price is primed for 30% rally

Why Solana price is primed for 30% rally

Solana price shows quite a few developments on the daily chart, all of which point to a bullish future for SOL holders. Investors can expect a quick run-up, which could develop into a medium-term uptrend if these optimistic conditions remain bullish.

More Solana News

Bitcoin: BTC targets $30,000 as short-term bias turns bullish

Bitcoin: BTC targets $30,000 as short-term bias turns bullish

Bitcoin (BTC) price shows a clear sign of the bulls’ victory. After failing to trigger a steep correction, bears look now out of context, at least in the short term, allowing buyers to restart a minor uptrend. 

Read full analysis

BTC

ETH

XRP