SBF States FTX is “Fine”, Competitor Spreading False Rumors
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SBF States FTX is “Fine”, Competitor Spreading False Rumors

FTX's CEO came out on Twitter to provide assurances to clients that their funds were safe and the exchange was "fine".
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Sam Bankman-Fried tweeted “FTX is fine” on Monday after investors rushed to hedge against a potential slump in the crypto exchange’s native token FTT. The move comes as investors brace for a possible decline in FTT following Binance’s decision to sell its FTT holdings due to recent news involving FTX and Alameda Research.

SBF Attempts to Calm Down Investors as Binance Liquidates $529M of FTT Tokens

Sam Bankman-Fried, CEO of cryptocurrency exchange FTX, just tweeted “FTX is fine” and added that “a competitor” is trying to go after the exchange using “false rumors.” SBF, who recently proposed new standards to protect crypto from hacks, also said the company has “enough to cover all client holdings” and reassured clients it does not invest their assets.

“FTX has enough to cover all client holdings. We don’t invest client assets (even in treasuries). We have been processing all withdrawals, and will continue to be.”

Sam Bankman-Fried said in a tweet.

SBF’s comments come after reports that Binance is offloading $529 million worth of FTT, FTX’s native token, due to “recent revelations.” Binance’s CEO Changpeng Zhao did not reveal what “revelations” specifically he was referring to.

“Due to market conditions and limited liquidity, we expect this will take a few months to complete.”

– said Changpeng Zhao, CEO of Binance

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SBF’s Crypto Trading Firm Alameda Research Accused of Inflating its Balance Sheet Through FTT

However, Zhao was likely referring to recent reports that Alameda Research, a crypto trading house owned by SBF, has a balance sheet that was inflated by the FTT token. In response, Alameda CEO Caroline Ellison said “that specific balance sheet is for a subset of our corporate entities, we have >$10b of assets that aren’t reflected here.”

In reaction to the reports, investors have rushed to hedge against a potential FTT slump, with the open interest tied to the token skyrocketing to a 1-year high of $203 million from $87.56 million in early trading hours in Asia, according to CoinGlass. Further, the funding rate, which represents the cost of holding bullish long positions or bearish short positions in an asset, has plummeted by 36% year-over-year.

“Last week, Alameda’s balance sheet was questioned, and Binance also announced that it would liquidate FTT and other assets related to the FTX exchange. That appears to have caused a panic among investors, who chose to hedge their assets such as FTT.”

– Griffin Ardern, volatility trader at Blofin

In the last thread of his tweet, SBF tagged Zhao saying he would love to “work together for the ecosystem.” Earlier this year, SBF said multiple crypto exchanges are facing insolvency, though they are yet to be exposed. Alameda was the firm that committed $500 million in financing to Voyager Digital, which fell into bankruptcy earlier this year.

Editorial update (November 9, 2022, 4:41am EST): SBF has deleted the tweet where he claimed FTX assets were “fine”.

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Do you think Binance was right to offload FTT tokens following the Alameda controversy? Let us know in the comments below.