FTX imploded in past week
FTX, the world’s second largest cryptocurrency exchange, has imploded, leaving what is said to be an $8.8 billion hole on its balance sheet. Many of its 1 million customers are currently unable to withdraw their money.
The Bahamas-based FTX group filed for bankruptcy protection in the U.S. last Friday. Sam Bankman-Fried, the founder of FTX, was replaced as CEO by John Ray III, a turnaround and restructuring attorney who worked on the liquidation of the defunct energy conglomerate Enron.
The FTX crisis came to the fore last week after Binance CEO Changpeng (CZ) Zhao tweeted that Binance would be “liquidating” its holdings of FTT tokens “due to recent revelations that have come to light.”
Its holdings were estimated to be roughly 5%, or $580 million worth.
In 2019, Binance invested in FTX as a shareholder. It sold that stake last year and received $2.1 billion in FTT tokens and Binance’s stablecoin (BUSD) as compensation.
FTX founder makes “very expensive call”
Binance CEO CZ, in a recent tweet, tries to dispel an ongoing rumor that his crypto exchange “shorted” or “dumped” FTT, leading to its collapse.
He said in full disclosure that Binance never shorted FTT. He said the exchange still has it in the bag because it stopped selling FTT after what founder Sam Bankman-Fried referred to as a “very expensive call.”
“We did not master plan this or anything related to it,” CZ stated in respect to the FTX crisis. He provided a few specifics about the call with the FTX founder: “I was surprised when he wanted to talk. My first reaction was, he wants to do an OTC deal, But here we are,” CZ said, asserting that he had “very little knowledge of the internal state of things at FTX” before the call.
As negotiations with Bankman-Fried ended, it reportedly told its employees to “stop the sale as an organization.”
