Spike In Network Activity Sees Nearly 3,000 ETH Burned in the Past Day The Defiant He suggested he didn’t have a choice after CoinDesk reported last week that 40% of Alameda Research’s balance sheet comprised FTT. It was Binance that triggered the run on FTX’s reserves when CZ said his exchange planned to sell an FTT position of potentially $500M worth of the tokens.
2: Don’t borrow if you run a crypto business… Have a large reserve.” “1: Never use a token you created as collateral. “Two big lessons,” Zhao posted as the news unfolded. Now it also appears to be its lender of last resort.Ĭhangpeng Zhao, the billionaire CEO of Binance known as CZ, was quick to highlight weaknesses in FTX’s business model. With $48B in daily trading volume, five-year-old Binance is the world’s No.
“This is one of the main reasons we’ve asked Binance to come in.” “Our teams are working on clearing out the withdrawal backlog,” Bankman-Fried tweeted on Tuesday. In the meantime, FTT has nosedived 79% since Tuesday, triggering so many withdrawal requests from investors Sam Bankman-Fried, FTX’s founder, was forced to apologize for delays. “It ONLY survived because it was able to secure funding from FTX using as ‘collateral’ the 172M FTT that was guaranteed to vest 4 months later.”įTX did not immediately respond to requests for comment. “Here’s what I think happened: Alameda blew up in Q2 along with 3AC+ others,” Nuzzi posted.
Looking for Alpha? Become a premium member of The Defiant and join our DeFi Alpha community. Nuzzi identified 173M FTT worth $4.2B that were transferred from the FTX Token’s vesting contract to Alameda, which were then immediately sent back to the smart contracts for FTX’s token. On Tuesday, Lucas Nuzzi, the head of research and development at CoinMetrics, tweeted that on-chain FTT flows suggest FTX may have bailed out Alameda in September. 2: Don’t borrow if you run a crypto business… Have a large reserve.’CZ Tweet 1: Never use a token you created as collateral. That’s because it was possible FTX was artificially bolstering Alameda’s trading book with its own currency. When news broke last week that the FTX-Alameda combine was dependent on a manufactured asset instead of an independent one such as Bitcoin or the U.S. Many DeFi assets have touched monthly lows.īut their losses pale in comparison to FTT, the homegrown token at the heart of FTX business model and the cornerstone of financials at Alameda Research, the exchange’s closely linked crypto hedge fund. Ether has tumbled 27% in the last two days and is trading at $1,140, while Bitcoin skidded to $17,300 and fell 17%, according to The Defiant Terminal.Īnd Solana, which has close ties to FTX thanks to the derivatives exchange’s investment in the blockchain network, has plunged 43% in the last 24 hours. The questions now are how bad is it, and how long will it last? Stricken RivalĮverywhere you looked in the wake of Binance’s announcement Tuesday that it had been asked to “help” its stricken archrival there was carnage. “Collapses such as these only serve to erode the confidence of users and the general public towards the industry, and could become a hindrance to growing adoption.” “These events quickly sent the broader market into a tailspin, heaping more pressure on the prices of crypto,” Bobby Ong, the co-founder of CoinGecko, told The Defiant. As cryptocurrency investors and users reckon with the fallout from Binance’s shocking takeover of FTX, one thing is clear: the episode is a disaster for the burgeoning industry.
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