Cailianshe November 9th (Editor Malan) Last night, the FTX Exchange, known as the "central mother" in the currency circle, was praised as the "bank run crisis" because of a media report and its quarrel with its competitor Binance.
On Tuesday, the FTT quote for the token issued by FTX fell below $5 from $22 on Monday, losing nearly 80%, and evaporated more than $2 billion in value within 24 hours.
and the plunge of FTT has also dragged down the value of cryptocurrencies such as Bitcoin. As of Tuesday's closing, the price of Bitcoin was $18,501.2, falling more than 10% in 24 hours, and it was the first time since mid-October that it fell below $19,000. Similar situations have occurred in ether and most major cryptocurrencies.
This unrestrained disaster can be called a "money circle massacre". In this storm, Binance not only escaped without permission, but may even win FTX at a low price. This "sexy operation" swept the industry and sparked heated discussion. Sam Bankman-Fried (SBF), CEO of
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FTX, is also the founder of cryptocurrency trading company Alameda Research.
FTX provides a cryptocurrency trading platform that gains foothold by charging commissions, while Alameda trades cryptocurrencies and earns profits through bid and ask spreads . Both are good at winning games, which also makes SBF one of the top crypto-circles at a young age.
However, on November 2, cryptocurrency media CoinDesk revealed that most of the assets in the balance sheet of Alameda, the sister company of the FTX exchange, are token FTT. It holds approximately 140 million pieces, accounting for 70% of the total FTT circulation, while Alameda holds US$5.8 billion in FTT-related assets, accounting for 88% of its net assets.
FTT is a "reward nature" token used by the FTX exchange to encourage users to use the exchange. Customers using the FTX platform can enjoy discounts on transaction fees and other rewards by using FTT. According to FTX, one-third of the exchange's commission is used to maintain the value of FTT, but the actual operation of issuing coins and controlling the value is full of fog.
According to general circumstances, most of the assets of cryptocurrency trading companies are composed of independent assets such as fiat currencies or other cryptocurrencies. It’s understandable to use FTT as an asset. The key problem is that Alameda uses too many FTTs to decorate the balance sheet.
If the FTT price drops sharply, then Alameda is forced to add margin to , and will face more doubts from the outside world; and if FTX is Alameda's FTT lender, the operations of FTX and Alameda will be suspected of selling with the left hand and buying with the right hand, which will cause a larger range of trouble.
Binance entered
As the largest cryptocurrency exchange, Binance also watched the media's questioning of FTX this time. Its founder Zhao Changpeng said on Tuesday that due to the news exposed by CoinDesk, he decided to liquidate the remaining FTT on the books.
This move has caused a large number of investors to follow suit. According to Coinglass data, in the past 24 hours, Bitcoin on FTX has been out of 19,941.64 coins, down 36.14 BTC. Traders are eager to pull cryptocurrencies out of FTX’s platform to prevent the FTX collapse from posing greater risks. Although Alameda has since expressed its willingness to spend $22 to take over all the sold FTT, the market still does not believe it can provide $580 million to fulfill its promise.
The large-scale run forced SBF to ask for help from Binance's Zhao Changpeng. Zhao Changpeng posted on on on Tuesday that Binance is planning to fully acquire FTX transactions to alleviate its pressure, while SBF responded that thanks to Binance for its assistance, and FTX's liquidity tightening pressure will be alleviated.
In addition, according to media reports, the transaction will only affect the business of FTX and Binance in non-US areas, and the two companies are currently conducting due diligence.
In addition to Binance, FTX also received support from other investors including Sequoia Capital and SoftBank. According to PitchBook, which tracks private capital, FTX has raised nearly $2 billion.
market changes
Kaiko research analyst Conor Ryder said that the industry generally expects FTX and FTT to get better in the future, but panic will still exist.
He pointed out that the FTX funds and Alameda funds and the relationship between the two are very opaque. No one knows the degree of correlation between the two, and that's the problem.This is also a problem for the industry to a large extent—the lack of transparency, which is why more regulation of centralized entities is needed. Marieke Fament, CEO of
NEAR Foundation, commented that a series of events such as Binance's acquisition of FTX highlighted the challenges behind the industry and the lack of transparency, which damaged the reputation of the cryptocurrency circle.
On the other hand, the aftermath of Binance's acquisition of FTX is also constantly rippling.
Binance accounts for 21.7% of the total global cryptocurrency trading volume, while FTX accounts for 3.96%, making it one of the top three exchanges in the cryptocurrency industry. The combination of the two will naturally create an unprecedented behemoth.
For Binance, if this merger and acquisition can be realized, its strength will be further strengthened. However, investors who invest in FTX are likely to lose money. Some media even analyzed that the plunge in FTT may lead to the clearance of SBF assets overnight.
What is even more speechless is that SBF has been applying to US Commodity Futures Trading Commission for a proposal to provide retail customers with centralized liquidation of margin products. This opinion is seen as another stage of crypto market structure, innovation and disruption. To this end, SBF has spent time and money desperately lobbying in recent stages.
However, SBF "has just started a business but the middle way collapsed", industry insiders analyzed that this will directly affect the views of US regulators on SBF and its proposals.
Brian Armstrong, CEO of another major cryptocurrency exchange Coinbase, complained about this, many people may still be confused by the minds of Washington , hoping that FTX's financial problems will not tarnish the regulatory authorities' views on the crypto industry.
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