The bird app is a wild place. There’s no place like Twitter to get a front-row seat to watch the heavy hitters in a crypto fight. It’s high drama.
Recently, there’s been much to behold. Binance CEO Changpeng “CZ” Zhao stated his company would ditch all its FTT tokens.
FTT is a utility token. It provides access to the FTX platform’s services and is the native token of FTX. FTT exists so traders can snag a discount on trading fees. Users get a break on trades and earn rewards, so there is an incentive to hold on to them. The more tokens someone holds, the bigger the deal.
When CZ publicly stated that he was dumping FTT, Twitter lit up like a firecracker.
“Well @binance and @FTX_Official are officially at war with each other.” – Alex Valaitis on Twitter
What’s Going on Here?
There is a rich history between CZ, the CEO of Binance, and Sam Bankman-Fried (SBF), CEO of FTX. Let’s pull some of these threads.
Binance is the world’s largest cryptocurrency exchange by volume. The company was founded in 2017. SBF hit the scene two years later with a potential rival exchange, FTX. Binance made an investment in FTX when it first launched. However, this partnership was not made to last.
Binance left its partnership with FTX last year and received $2.1 billion in BUSD (a fiat-backed stablecoin) and FTT.
FTX has taken the number two spot in volume, and the company is on the heels of Binance. However, there are other reasons CZ has his head on a swivel.
SBF is trying to schmooze United States regulators and influence American policy. And by schmooze, I mean dump truckloads of money into US politics. Bankman-Fried ranks number six on the list of donors, according to Opensecrets. He has donated $39.8 million this midterm season. He’s donated money to both sides of the aisle, but his donations lean primarily Democratic. He’s been upfront about wielding money to influence regulation.
“I was a significant donor in both D and R primaries…supporting constructive candidates across the aisle to prevent pandemics and bring a bipartisan climate to DC. And working with them to support permissionless finance.” – SBF on Twitter
CZ, watching this carefully crafted schmooze-fest closely, sees a glimpse of Alameda Research’s balance sheet. Alameda Research and FTX are both giants and both owned by SBF. Alameda Research is SBF’s trading firm.
The balance sheet is full of FTT tokens.
“It shows Bankman-Fried’s trading giant Alameda rests on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto.” – Coindesk
“It’s almost as if SBF found a way to hack the financial system, printing billions of dollars out of thin air against which he was able to borrow massive sums from unknown counterparties,” Coindesk’s report purported.
CZ is now ready to make moves.
Shortly after this shocking report came out, CZ decided to liquidate all FTT holdings. This is where the front-row seat to crypto Twitter gets good.
As the bird app lit up, viewers put their feet up and got the popcorn ready.
After CZ announced the liquidation of FTT, the token price quickly dropped. SBF called for exchanges to “make love (and blockchain) not war,” but CZ’s decision was firm.
Onwards
CZ doesn’t appreciate SBF’s lobbying, and the glimpse of Alameda’s balance sheet was the flame that lit the match CZ was holding. He was ready to let FTT go, and he did it publicly. With that, he set Twitter on fire and the crypto community at large.
Will this make FTX insolvent? SBF claims that it won’t. But it’s been a prolonged crypto winter, and investors are skittish. The last thing anyone wants to be a part of is another crash like Luna.
CZ and Binance will hold on to that top spot as SBF scrambles to clean up this mess.
Keep the popcorn and Milk Duds close by; these two heavy hitters may go a few more rounds.
Read more about the possible dark side of Sam Bankman-Fried.
About Kit
Kit Campoy is a former retail professional turned freelance writer. She writes about Leadership, Retail, and Web3. Contact Kit for your content needs.