Sam Bankman-Fried’s crypto exchange FTX experienced an increase in withdrawals after competitor Binance Holdings Ltd. announced plans to divest its entire holding of FTX’s native FTT token.
(Bloomberg) — Sam Bankman-Fried’s crypto exchange FTX experienced an increase in withdrawals after competitor Binance Holdings Ltd. announced plans to divest its entire holding of FTX’s native FTT token.
Reserves of stablecoins on FTX dropped to $114 million on Monday from $394 million three days earlier, according to data from CryptoQuant. Hourly withdrawals of Ether, the second-biggest cryptocurrency, also rose sharply on the exchange, CryptoQuant data showed.
“Based on the on-chain flows, it looks like FTX is experiencing a high volume of withdrawals,” said Hayden Hughes, chief executive of Singapore-based trading platform Alpha Impact. “So far it looks that they’ve been able to meet those.”
Binance CEO Zhao Changpeng said on Twitter on Sunday that he’d decided to sell all of the company’s FTT tokens, worth about $529 million at the time. The announcement caused FTT’s price to drop and triggered unease in wider crypto markets, with Solana, a token backed by FTX, down 7.1%.
Read more: Binance to Sell $529 Million of Bankman-Fried’s FTT Tokens
When Binance exited an investment in FTX last year, it received $2.1 billion in Binance USD and FTT coins, the remainder of which it has decided to unload, Zhao said in his tweet, citing “recent revelations that came to light.”
In a tweet on Monday, FTX said it was “churning through” Bitcoin withdrawal transactions, making some changes to “help speed it up.” It added that transactions involving stablecoin issuance and redemption may be slower as banks were closed over the weekend. Stablecoins are tokens whose value are pegged to a certain asset, such as the dollar.
Bankman-Fried also took to the social-media app to reassure investors.
News site CoinDesk said in a Nov. 2 story that much of the balance sheet of Alameda Research — a crypto trading house Bankman-Fried owns — is comprised of the FTT token.
On Sunday, Caroline Ellison, CEO of Alameda, said “that specific balance sheet is for a subset of our corporate entities, we have >$10b of assets that aren’t reflected here.” Ellison later offered to buy all the FTT tokens from Binance at a price of $22.
FTT was trading at $22.49 at 10 a.m. in London on Monday, according to CoinGecko, down 3% in the past 24 hours.
–With assistance from Emily Nicolle.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
