Binance vs. FTX: What happened that forced FTX to urgently mobilize $560 million

Binance and FTX are bound to have a fight. When Binance withdrew its stake in FTX in 2021, people in the crypto industry predicted this.

Now, Binance and FTX have started to compete on the front line. Golden Finance will show you the recent situation of Binance and FTX on the battlefield.

1. Reason: Rumor has it that Alameda is “insolvent”

On November 4, Coindesk, a well-known American media, obtained a private document showing that the balance sheet of Alameda, a subsidiary of SBF, was at great risk, and the amount of related transactions with FTX, an exchange controlled by SBF, was huge. As of June 30, Alameda's assets amounted to $14.6 billion, and its largest single asset: $3.66 billion of "unlocked FTT". The third largest item on the balance sheet is "FTT collateral" of $2.16 billion. In addition to FTT, there is a $7.4 billion loan in its $8 billion debt. In response to Coindesk's investigation, Alameda CEO Caroline Ellison declined to comment. FTX also did not respond to requests for comment. Market rumors say that Alameda's $8 billion loan is likely to come from FTX or SBF itself, and if the market falls, Alameda will face insolvency.

2. Alameda responded: It was rumored that there were more than $10 billion in assets on the balance sheet that were not reflected

Alameda co-CEO Caroline Ellison responded to a Coindesk inquiry: Some notes on the balance sheet information that has been circulating recently: The specific balance sheet is for a subset of our corporate entities, and we have over $10 billion in assets that are not reflected there. The balance sheet lists several of our largest long positions; we obviously have hedges that are not listed - given the tightening of the crypto credit space this year, we have now returned most of the loans.

3. CZ: All remaining FTT will be liquidated in the next few months

Binance founder CZ tweeted on November 6 that as part of Binance's exit from FTX last year, Binance received approximately $2.1 billion in cash (BUSD and FTT). Due to recent revelations, we have decided to liquidate all remaining FTT on our books.

He also said that an attempt would be made to do so in a way that minimizes market impact and that this was expected to take several months to complete due to market conditions and limited liquidity.

Zhao Changpeng also said that this does not seem to be a move against competitors. "Our industry is in its infancy, and every public failure of a project will hurt every user and every platform. We usually hold tokens for a long time. We have held FTT for so long, and our actions remain transparent."

4. Alameda: All FTT held by Binance is sold at $22

Alameda co-CEO Caroline Ellison responded to CZ: If you want to minimize the market impact on your FTT sales, Alameda is happy to buy it from Binance at $22 today.

5. Binance started selling FTT as early as November 5

On November 5, CZ inexplicably tweeted that cryptocurrency is very risky.

Less than two hours later, Whale Alert detected that 23 million FTT (worth US$584 million) were transferred from an unknown wallet address to the Binance exchange.

On November 7, CZ responded that the FTT monitored by Whale Alert was part of the FTT that Binance wanted to liquidate. It is highly likely that after seeing the Coindesk investigation, CZ started selling FTT, whether he really believed in the Coindesk investigation or took the opportunity to suppress FTX.

6. CZ: Liquidating FTT is based on the lessons learned from LUNA

On November 7, CZ continued to say that liquidating FTT was just risk management for late exit, and it was also a lesson learned from the previous LUNA. Binance has supported it before, but it will not pretend to love after the divorce. We are not against anyone, but we will not support those who lobby against other industry participants behind the scenes. "Changpeng Zhao added that this is not a war or a fight, Binance just "cleaned the house" and moved on.

7. SBF joins the battle: Rumors are unfounded and FTX is highly regulated

SBF officially joins the fray: A bunch of unfounded rumors have been circulating, FTX retains audited finances, and while it sometimes slows down product rollouts, it keeps FTX highly regulated. FTX has processed billions of dollars in deposits/withdrawals today, and there are a lot of USD to stablecoin exchanges going on.

8. Alameda: urgently mobilized $560 million from Circle to FTX

After the Coindesk investigation, Alameda began to mobilize USDC from Circle to recharge FTX. Etherscan data shows that in the past three days, Alameda's address (0x83a127952d266a6ea306c40ac62a4a70668fe3bd) recharged about 560 million US dollars to FTX, most of which came from Circle.

As market rumors fermented and Binance and FTX fought, the price of FTT also fluctuated greatly, especially in the past 24 hours before and after CZ tweeted about liquidating FTT and Alameda co-CEO Caroline Ellison announced that she would take over all of Binance FTT.

As the two giants in the cryptocurrency exchange sector, the war between Binance and FTX will continue. It remains to be seen who will be the winner.