The price of FTX’s FTT token has lost around 18% of its value over the past 24-hour period as the cryptocurrency market fears the exchange’s quant trading firm Alameda Research could be insolvent.
Short interest in FTT has surged while the token’s price plummeted, shortly after Binance CEO Changpeng Zhao revealed that the firm is selling its FTT token holdings after “recent revelations came to light.” The exchange used to have a minority stake in FTX, but it exited its investment last year and received at the time $2.1 billion in BUSD and FTT.
Binance holds around 23 million FTT, worth over $500 million. Per Zhao, Binance’s sale will take months to complete, due to “market conditions and limited liquidity.” Zhao’s move came shortly after a leaked balance sheet of Alameda revealed it was seemingly propped up by FTT.
The crypto market has since then grown concerned about FTX’s liquidity, with withdrawals from the exchange piling up to the point $450 million left its wallets. Binance saw an inflow of over $400 million of stablecoins after the outflows began.
More recently, BitDAO, a large decentralized autonomous organization (DAO) that is supported by crypto exchange Bybit, has asked Alameda to prove they continue to hold 100 million BIT tokens they acquired in November last year by converting 3.36 million FTT
The swap deal required Alameda to hold the tokens for at least three years, but a sudden drop in BIT’s price saw some in the community question the quant trading firm’s position. BitDAO issued a veiled threat to take action, which could involve the sale of the FTT.