Binance moves to liquidate FTX token holdings as open interest in FTT futures doubles

This week, FTT has attracted some notice. Users of BitMEX can trade FTT with up to 50x leverage through our FTTUSD and FTTUSDT listings starting at 12:00 UTC today. Quanto Contract Specs for FTTUSD.

FTT listings margined by Tether and Bitcoin

Regardless of the FTT/USD pricing, the FTTUSD product, like all other Quanto contracts, has a fixed Bitcoin multiplier. Due to this, traders can buy or sell FTT without touching either FTT or USD.

As the FTT/USD exchange rate fluctuates, traders can post margin in XBT and profit or lose money in XBT. The reason that the FTTUSD swap trades at a premium or discount to the FTTUSD spot price may be due in part to this Quanto risk premium.

In a tweet, CryptoHayes wrote:

“Many other investments become unnecessary when you can lend money to the U.S. government for a year at rates close to 5%. There will be more casualties in the #crypto credit tragedy. Luna/3AC/CEL = Bear Sterns; who will be Lehman?”

Investor panic amidst Binance’s debut into the FTX-Alameda

Open interest, or the amount of money invested in futures and perpetual futures linked to FTT, has more than doubled since early Asian hours from $87.56 million to $203 million, setting a 12-month high.

As per information provided by Matrixport Technologies, the funding rate, or the cost of holding bullish long positions or bearish short positions, has fallen drastically to an annualized -36%. A negative funding rate indicates that shorts or bears are in control and are willing to pay extended funding to maintain their positions.

Rising open interest and the pessimistic financing rate signal traders are selling FTT, which is what the market is doing.

FTT losses more of its value

The CEO of the largest cryptocurrency exchange, Binance, Changpeng Zhao, disclosed plans to liquidate the company’s approximately $530 million stake in FTT, the native token of Sam Bankman-FTX, Fried’s on Sunday. Later, Caroline Ellison offered to purchase all of Binance’s FTT tokens for $22 as the CEO of Bankman-trading Fried’s firm Alameda Research.

FTX Crypto Derivatives Exchange founder and CEO Sam Bankman-Fried delivered a speech on October 13, 2022, in Washington, D.C., at the Institute of International Finance (IIF) annual membership convention.

FTX Crypto Derivatives Exchange founder and CEO Sam Bankman-Fried delivered a speech on October 13, 2022, in Washington, D.C., at the Institute of International Finance (IIF) annual membership convention.

The already wounded digital asset market is being affected by simmering conflicts between the two wealthiest executives in the crypto sector.

Could there be a solvency issue at the company?

The native token of Sam Bankman-FTX, Fried’s FTT, is held by Binance for over US$530 million. On Sunday, Binance Holdings Ltd.’s billionaire CEO Zhao “C.Z.” Changpeng announced plans to sell this position on Twitter. The world’s largest and seventh-largest crypto exchanges are administered by Binance and FTX, respectively.

Zhao claimed that “new developments” had caused him to make his choice. The FTT token makes up a sizable portion of the balance sheet of Bankman-trading Fried’s firm Alameda Research, according to a November 2 story. Following Zhao’s announcement, traders hurried to withdraw money from FTX, and the price of FTT dropped in large trading volumes.

In response to that article, Caroline Ellison, CEO of Alameda, stated on Sunday that this balance sheet only represents a portion of the company’s corporate entities and that there are more than US$10 billion in assets that are not included. Later, Ellison made the US$22 purchase offer to buy all of Binance’s FTT tokens.

A fight between the two billionaires occurred at a difficult time for the sector, which was rocked by several scandals this year, from the collapse of the TerraUSD stablecoin to a run of bankruptcies among crypto lenders. Anto Paroian, CEO of crypto hedge fund ARK36, stated that the industry is “still suffering from PTSD.”

Trying to promote FTT

Binance’s ownership of FTT is a carryover from its stake in FTX, which Zhao claims was sold for around US$2.1 billion last year. The CEO declared he would make an effort to minimize market impact when selling the FTT tokens. He noted that it might take a couple of months to finish the procedure.

In recent months, Zhao and Bankman-Fried have engaged in a Twitter battle, exchanging insults from allegations of front-running deals to lobbying U.S. legislators. Zhao first denied that selling FTT was a move against a rival in a series of tweets on Sunday, yet a later statement insinuates discontent with FTX.

Banker Fried is said to have a net worth of $15.4 billion, while Zhao is worth $18.9 billion.