On November 6, 2022, Binanceโs founder and then-CEO Changpeng Zhao tweeted about Binanceโs decision to liquidate its FTT holdings amid solvency concerns, causing controversy within the cryptocurrency industry.
The tweet by Zhao sparked significant distrust in FTX, leading to mass withdrawals and the eventual filing for bankruptcy by FTX. Binance denies allegations that it aimed to destabilize FTX.
Binance Liquidation Spurs Debate Over FTX Solvency
Binanceโs announcement in 2022 to liquidate FTT holdings prompted questions about FTXโs financial health. This decision followed rumors regarding FTX and Alamedaโs solvency, leading Binance to reduce risk exposure. Key figures include Changpeng Zhao from Binance and Sam Bankman-Fried from FTX. Management at FTX alleges Binance orchestrated a destabilizing campaign, but Binance maintains its actions were defensive, not aggressive.
Investor Confidence Plummets Amid Binanceโs Market Move
The market response to the Binance tweet was immediate, with investors losing confidence in FTX. This loss of trust resulted in a liquidity crisis, precipitating FTXโs rapid bankruptcy declaration. Following the event, Binanceโs liquidation triggered massive selling in FTT tokens, causing broader market volatility. Legal actions are now underway to scrutinize Binanceโs intent and impact within the industry.
Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books. โ Changpeng Zhao (โCZโ), Former CEO, Binance
Experts Question Binanceโs Role in Crypto Market Volatility
This event is not isolated; similar incidents occurred when Binance delisted BSV in 2019, prompting industry-wide impacts. Such events highlight how Binanceโs decisions often reverberate globally. Experts from Kanalcoin highlight that while Binanceโs moves are controversial, the lack of definitive on-chain proof undermines deliberate intent claims. The episode underscores the sectorโs sensitivity to corporate decisions and communications.
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