The next Terra Luna? ‘Bank Run’ Fears Emerge as Billionaire Exchange Owners Go to War for $2 Trillion Following Bitcoin, Ethereum and Cryptocurrency Crash
Bitcoin
Subscribe now to Forbes’ CryptoAsset & Blockchain Advisor and successfully navigating the $2 trillion bitcoin and crypto market crash
Bitcoin price has crashed to around $20,000 per bitcoin, down from nearly $70,000 a year ago. Ethereum
Now, the billionaire CEOs of major crypto exchanges Binance and FTX, Changpeng “CZ” Zhao and Sam Bankman-Fried, have started a public war of words following what CZ called “recent revelations” about the health of FTX’s balance sheet — warning he learned from the terra luna meltdown.
It is in a brutal bear market that you need updated information the most! Sign up for free now CryptoCodex—A daily newsletter for traders, investors and the crypto-curious that will keep you ahead of the market
Bitcoin, ethereum and other major cryptocurrencies have suffered an almighty crash this year and are drying up … [+]
CZ sent shockwaves through the bitcoin and crypto community when he announced that Binance was liquidating its holdings of FTX’s cryptocurrency FTT, a rival to Binance’s own much larger BNB
FTT has a market cap of $3 billion compared to BNB’s $53 billion, according to CoinMarketCap data. Both FTT and BNB are used as so-called exchange tokens that give users discounts on their respective platforms.
CZ did not specify the value of the FTT cryptocurrency he planned to offload, but it is believed that Binance may hold about $500 million in FTT following the sale of its FTX stake last year, according to a Bloomberg report that cited anonymous sources. The price of FTT has crashed by just over 10% in the last week.
On Saturday, nearly $600 million of FTT was transferred from a wallet to Binance’s exchange, according to Etherscan data. CZ confirmed via Twitter, the transfer was “part of” Binance’s FTT exit.
“Liquidating our FTT is just post-exit risk management, learning from luna,” CZ posted to Twitter on Sunday, pointing to “recent revelations that have come to light”.
Last week, crypto blog Dirty Bubble Media drew parallels between Sam Bankman-Fried’s trading company Alameda Research and bankrupt crypto lender Celsius after a Coindesk reports that alleged Alameda’s balance sheet is backed by FTX’s native token, FTT.
After the collapse, Celsius has been accused of artificially inflating its balance sheet by manipulating the price of its cel cryptocurrency.
“Due to market conditions and limited liquidity, we expect [the sale of Binance’s FTT] will take a few months to complete,” CZ said, adding that the sale will be done in a way that “minimizes market impact.”
Caroline Ellison, CEO of Alameda, hit back at CZ’s proposal, telling him, “If you want to minimize the market impact on your FTT sales, Alameda would be happy to buy everything from you today for $22.”
Ellison previously posted that Alameda’s reported balance sheet is “for a subset of our corporate entities” and the company has more than “$10 million of assets that are not reflected there.”
The twist is the latest in a saga that began last month when Bankman-Fried was accused of serving his own interests with regulatory proposals he had put forward – and has since rowed back.
Register now for CryptoCodex—A free, daily newsletter for the crypto-curious
The price of FTX’s FTT has halved over the past year, crashing along with the price of bitcoin, … [+]
“We gave support before, but we don’t want to pretend that we love after divorce,” CZ said. “We are not against anyone. But we will not support people who lobby against other industry players behind their backs.”
The drama has caused consternation among the crypto community who fear that the industry will be hit hard by another terra luna or Celsius-like meltdown.
“[It] feels like people want FTX to be insolvent and are trying to cause a bank run,” Gabriel Shapiro, the general counsel at blockchain researcher Delphi Labs, posted to Twitter. “[It] would be another major political [and] regulatory black eye for the industry – can’t we?”
