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FTT ‘revelations’ sink token price: Why is Binance offloading all $529m of its SBF’s FTX holding?

By Daniela Ešnerová

11:43, 7 November 2022

FTX token (FTT) logo
Binance CEO said the FTT holding sale could take “a few months to complete” due to market conditions and limited liquidity. – Photo: ShutterStock.

FTT, the native token of FTX cryptocurrency exchange platform, sank over 10% in a matter of hours after Binance said it would get rid of all of its FTT holdings in the wake of “recent revelations.”

On Sunday afternoon, Binance CEO Changpeng ‘CZ’ Zhao tweeted that his company would “liquidate any remaining FTT on [its] books.” This equates to $529m, according to Bloomberg counts.

The revelations that prompted the decision, referred to a leaked balance sheet of Alameda Research, a hedge fund owned by the FTX chief executive, Sam Bankman-Fried (SBF), which showed an overlap between the two firm's financials.

FTX (FTT) to US Dollar 

Alameda to Binance: 'We will buy all your FTT today at $22'

During the weekend, CoinDesk published a leaked balance sheet showing that Alameda owned “$5.8bn of FTT tokens ($3.66bn of “unlocked FTT” and $2.16bn of FTT tokens pledged as collateral) as of June 30. Alameda was revealed to have $14.6bn in assets and $8bn in liabilities, including $7.4bn in unidentified loans.”

In response, Alameda's CEO, Caroline Ellison, defended the financial soundness of its firm. Ellison wrote that the leaked document was for “a subset of our corporate entities.” 

“We have over $10bn of assets that aren’t reflected there,” she wrote. “The balance sheet breaks out a few of our biggest long positions; we obviously have hedges that aren’t listed - given the tightening in the crypto credit space this year we’ve returned most of our loans by now,” Alameda's CEO concluded.

Responding to CZ's tweet about Binance liquidating its FTT position, Ellison offered to buy all of Binance's FTT holding for $22 a token. 

BTC/USD

66,771.35 Price
-0.990% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

ETH/USD

3,489.66 Price
-1.050% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

US100

19,526.60 Price
-1.140% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 7.0

XRP/USD

0.60 Price
-0.450% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

At the time of writing, FTT was trading at $22.46, according to CoinMarketCap.com.

Binance phasing out its FTT stash sale

Commenting on liquidating Binance's FTT stash, CZ said the sale would be done over a period of time to “minimize market impact.”

“We will try to do so in a way that minimizes market impact,” CZ wrote. “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 nascence 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,” he added.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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