Binance liquidates remainder of FTX token holdings

Binance continues to disentangle from FTX as CEOs disagree on DeFi regulation

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Binance has started to liquidate its holdings of FTT, the native token of its rival exchange FTX. 

In a statement to Twitter, Binance’s CEO, Changpeng “CZ” Zhao, said that “due to recent revelations” the cryptocurrency exchange had “decided to liquidate any remaining FTT” left on its books after its exit in 2021 from FTX equity. The total sum received by Binance last year in Binance USD and FTT amounted to roughly $2.1bn. 

According to on-chain analysis, around 23 million FTT, worth around $530m, was transferred to Binance from an unknown wallet. This was equivalent to around 17% of FTT’s total supply. Zhao said that “due to market conditions and limited liquidity” the sale will take “a few months to complete”.

Caroline Ellison, the chief executive of Alameda Research, the principal trading firm founded by Sam Bankman-Fried, owner of FTX, responding to Zhao’s statement,  said: “If you're looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22!”

The “recent revelations” that Zhao alluded to were most likely those made in a recent Coindesk piece by Ian Allison, which raised concerns over the extent to which billionaire Sam Bankman-Fried’s two companies, FTX and Alameda Research, operate as separate institutions. 

The article described the firms as “unusually close” and, making reference to a private financial document, alleged that Alameda’s balance sheet was “full of FTX”. Although it admitted there was “nothing per se untoward or wrong about that”. Allison said: “[I]t shows that Bankman-Fried’s trading giant Alameda rests on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto.”

Ellison said that the document in question was only the the balance sheet  for a “subset” of Alameda’s corporate entities and it did not reflect the more than $10bn of assets that the firm has elsewhere. 

Zhao dismissed “speculation” as to whether his decision constituted “a move against a competitor”, adding: “Every time a project publicly fails it hurts every user and every platform.”

In recent weeks, Bankman-Fried and Zhao have both weighed in on the debate surrounding how the digital asset sector should best be regulated, clashing particularly over the future of decentralisef finance (DeFi).

Bankman-Fried, who is a prominent Democratic Party donor, has pushed for greater regulation and government oversight. 

As the industry and markets reacted to Zhao’s announcement, the Binance CEO admitted: “We are not against anyone. But we won't support people who lobby against other industry players behind their backs.”

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