08/11/2022
CZ of Binance vs. SBF of FTX/Alameda Battle
Last night, the CEO of Binance published a series of tweets in which he wrote that Binance received $2.1 billion in BUSD and FTT as part of the exit strategy, and due to "recent revelations" (about FTX), Binance will sell its stake in FTT tokens, which amounts to about $600 million. CZ said they would sell the token within 1-2 months on the open market.
The new head of Alameda Research, Caroline Ellison, publicly appealed to CZ and asked to sell all FTT tokens at $22 in OTC (over the counter, i.e., off the markets) to reduce the market impact on the token.
The situation is significantly worsening because the FTT sale is taking place in the already bearish market, with looming heavy regulation from the U.S. and global economic instability While on the surface, CZ said that the sale will be due to "liquidating our FTT is just post-exit risk management, learning from LUNA," there are few more possibilities about the true motivation for the battle:
▪️The CEO of FTX has taken a proactive regulatory stance, trying to limit the rights and freedoms of DeFi Sam also proposed to introduce licensing of protocol front-ends. In such an approach, the winning parties would be only the large CEXs like FTX.
▪️Alameda's balance sheet leaked to CoinDesk and its structure is worrying. As was noted before, 1/3rd of Alameda's assets are FTX tokens, and nearly 50% of assets are in SBF-affiliated projects (FTX, Solana, and part of "unidentified "crypto held"). The situation worsens with the obvious signs of FTX+Alameda operations, where one helps to pump token value and another uses these token gains as collateral to borrow more and pump the token further.
▪️Sam Bankman is one of the top-5 donors in 2022 in the U.S. elections and is growing his influence. Previously Sam hinted that he is lobbying interests in Washington, and when referring to CZ, Sam said "excited to see him repping the industry in D.C. going forward! uh, he is allowed to go to D.C., right?"
▪️CZ openly compared FTX/Alameda to the collapsed LUNA , and what could be worrying is CZ, unlike most of us, has access to much more information, and the comparison to LUNA, might be not coincidential.
While either of the above options could be true, a mix of them can also be correct. Some conspiracies say that due to SBF's origins – he has big opportunities in U.S. politics and was unwilling to share the power with CZ. According to others, CZ just got mad about SBF's disrespect to him. After all, CZ was among the first early investors in SBF's ventures, so if not CZ, there could be no FTX or Sam Bankman-Fried as we know him today.
Irrespective of the motives, in this situation, CZ is either a:
▪️White knight saving the industry against anti-DeFi billionaire
▪️Wise investor reducing risks as he sees them
▪️Jealous billionaire who is unhappy about not getting a piece of the "U.S. power"
▪️Or a mix of the above
Nonetheless, CZ promised to sell the FTT token, knowing its importance to SBF's empire and he already managed to cause a "bank run" as thousands of people worried about FTX's solvency started massive withdrawals While CZ still has a lot of unsold FTT tokens, SBF already felt the effect as today Alameda started urgently draining their capital from other exchanges to prevent FTX from stopping withdrawals, which would actualize the death spiral.
Today, FTX already saw nearly a billion Dollars of deposits outflow, while Binance saw about $400 million of deposit inflow from FTX customers. Even though SBF said that they have over $1 billion in excess cash and Alameda's CEO noted that Alameda has over $10 billion in undisclosed assets the question remains open: if the trend continues and FTX keeps losing $1 billion of deposits daily and has to burn more cash to support FTT token, how long Sam's empire can withstand?
While everyone hopes the battle ends in a peace, if it doesn't – the result and effects on the crypto industry could be devastating and much worse than what was started by Terra/LUNA/3AC/Celsius.
