Recall that the head of cryptocurrency exchange FTX, Sam Bankman-Fried, was the subject of criticism within the blockchain community the day before. The fact is that at the end of October he shared his thoughts on the regulation of the decentralised finance industry, which fans of decentralisation did not like.

FTX chief Sam Bankman-Fried

In a nutshell, Bankman-Fried suggested creating certain blacklists of blockchain addresses that are banned for interactions. What’s more, such lists were to be the responsibility of centralised government agencies like the US Office of Foreign Assets Control. Although Sam later admitted he was wrong, such remarks sent a worrying message to those who had previously supported the Bankman-Friede policy.

The current situation has turned out to be no less serious.

Why cryptocurrencies have fallen

Problems for cryptocurrency market sentiment were created by a published balance sheet from Alameda Research, a company closely associated with the cryptocurrency exchange FTX and its chief Sam Bachman-Fried.

Last week, a version of the company’s balance sheet leaked online that confirmed Alameda had the equivalent of $3.66 billion in “unlocked FTT”, the native token of the FTX cryptocurrency exchange. The document also noted $2.16 billion in “FTT collateral”. In the end, the balance sheet claimed Alameda Research had $14.6 billion in assets and $8 billion in liabilities, including $7.4 billion in loans.

This spoke not only to the company’s poor balance sheet, but also to Alameda’s close association with FTX. Still, FTT tokens worth 3.66 billion represented 25 per cent of its total assets of 14.6 billion.


As a result, investors were scared of serious problems for the FTX cryptocurrency exchange and even its possible closure. After all, we have already seen giants like Three Arrows Captal crypto fund collapse in mid-2022, so a new market collapse given this scenario seemed equally likely to happen.


Caroline Allison, CEO of Alameda Research, decided to clarify the situation. Here’s her quote from Twitter.

A few clarifications on the balance sheet information that has recently surfaced online:
– this balance sheet is for several of our legal entities and we have over $10 billion in assets that are not reflected in it;
– the balance sheet reflects some of our largest long positions. Naturally, we have hedging positions that are not on the list;
– Given the tightening of the cryptocurrency loan niche this year, we have already repaid most of our loans by today
.

In other words, in reality the situation with Alameda has been more positive than it seemed because of the publication of the report.

However, this is where the doubts of the cryptocurrency community were fueled by Binance CEO Changpen Zhao. He stated that his company has decided to get rid of all FTT tokens in their possession. That said, Binance has plenty of FTT: the company received the equivalent of $2.1 billion in BUSD and FTT as part of its exit from FTX shares last year.

Here’s a relevant rejoinder from Chanpen on Twitter.

Due to the recent publicity that has come to light, we have decided to liquidate any remaining FTT in our possession.

Chanpen noted that the team will do this with the idea of minimising the impact on the digital asset market and the FTT rate in particular. Therefore, it will take months to implement the plan, Zhao said. He continued.

We usually hold tokens for a long time – and the same thing happened here. We are transparent in our actions.

Amid all this, the FTT exchange rate experienced serious volatility yesterday. Here’s a 15-minute chart of the token, showing its spikes.

A 15-minute chart of the FTT exchange rate

That said, Chanpen clarified that FTT’s large transfer of the equivalent of $584 million on Saturday was “part of it”. That is, Binance clearly has more tokens.

Confirmation of Binance exchange’s connection to large FTT token transfer

The publication was responded to by the already mentioned Caroline Allison. She stated that Alameda is willing to buy all FTT tokens in Binance’s possession at $22. This would minimise the impact of large sales on the market.

However, questions have been raised about this offer. The fact is that the cryptocurrency exchange FTX’s reserves in Stablecoin fell to a low of $51 million the previous day. And that’s the equivalent of a 93 per cent slump over the past two weeks.

Stablecoin reserves on cryptocurrency exchange FTX

A Twitter user under the pseudonym frxresearch asked how much money Alameda was going to buy back FTT given the sagging FTX reserves. Changpen Zhao responded to the tweet by posting just one emoji.

Changpen Zhao’s response on Twitter

Amusingly, a fake account claiming to be Sam Bankman-Friede reacted to the event. He posted the following statement in response to Chanpen’s post about wanting to sell FTT.

Well, do you want to play the game? Do you know how much BNB we have? Can you imagine what will happen if we dump them on the market? I’ve always respected you, Chanpen, but now that’s over.

Tweet from Sam Bankman-Fried’s fake account

The funny thing is that the big news outlets on Twitter bought into this post. In particular, here’s Watcher Guru’s post.

The impact of the fake Sam Bankman-Friede post

What’s going on with the FTX exchange

The cause for additional user anxiety has been the slowdown in withdrawals from the FTX exchange. That is, amid the developments, some traders decided to withdraw their coins from the platform, but faced increased waiting times.

Beatlord, who has 232,000 followers on Twitter, notably reported this. Here’s his quote from Twitter.

Just woke up. I have a serious amount of money I can’t get out of FTX. I don’t know if anyone else is having similar problems?

However, Bitlord soon received a response from a user nicknamed SOLhodl, who was already withdrawing tens of thousands of dollars that day. He noted that withdrawals are being made, albeit slowly.

Withdrawals from cryptocurrency exchange FTX

The Block’s spokesperson Larry Cermak responded to the event. For the sake of transparency, he published his database of wallets that are marked as belonging to Alameda. According to his information, the balance has dropped by 47 per cent or $230 million in the last month.

Blockchain wallets linked to Alameda

Cermak added that he has no doubt that Alameda has the funds to buy FTT from Binance. That said, Larry estimates the chance of insolvency of the company to be “around zero per cent”.

Finally, the reason for the slow withdrawal was explained by FTX representatives. They said they were funding hot wallets, but were making withdrawals throughout the day.

The market, taking into account what is happening today, looks like this.

State of the cryptocurrency market today


We believe that this situation once again showed how vulnerable the cryptocurrency market can be given essentially only rumors and inaccurate information. However, we have also seen here that blockchain enthusiasts in principle accept the likelihood of a collapse of an exchange as large as FTX. Apparently, the market crash of May 2022 and all its ramifications have left their mark on perceptions.