The surprise liquidation of FTX tokens by Binance after the denial of liquidity issues at the rival exchange seems like a chess game or a takeover bid.
Recently, Binance CEO hinted that the crypto exchange liquidated its holdings of FTT, the native token of FTX. The decision comes after weeks of slander targeting FTX founder and CEO, Sam Bankman.
The backlash emanated from the regulatory proposals he put forth with respect to DeFi restrictions in the crypto space. Apparently, Sam promised to revisit his regulatory remarks.
FTT liquidation
Binance received the FTT funds as part of its exit plan. The crypto exchange held an equity position in FTX since 2019.
Earlier on, FTX bought out Binance’s stake in the company through a $2.1 billion mix of FTT on their books. Binance CEO, Changpeng Zhao said that the liquidation is expected to take a couple of months to complete.
Zhao cited market conditions and limited liquidity played a part in the time frame. The liquidation will occur in a way that tries to minimize the market impact on FTT.
Recently, 22,999,999 FTT was transferred from a wallet to Binance. The value of the FTT was capped at $84 million at the time of transfer. The FTT transferred equates to 17% of the circulating supply of FTT.
Zhao confirmed the shifted funds formed part of Binance’s move to liquidate its position in FTX. Some Twitter users suggested that the transfer would impact the loans backed in FTT.
CEO of Alameda Research, Carolline Ellison, offered to buy Binance’s remaining FTT for $22. She set the condition that Binance ought to minimize the market impact of the liquidation move.
The takeover drama
Bankman recently reiterated that Binance and FTX are not in wrangles despite rumors in the media. Rumors emerged in the media of a conflict between the two exchanges. However, Binance remains committed to a more decentralized global economy.
The exchange also works to improve industry relations with regulators. Bankman insisted that they are in the right hands.
On the contrary, Zhao issued his own opinion on Twitter. Zhao hinted that FTX cited a significant liquidity crunch. To protect users, Binance signed a non-binding letter of intent. The letter of intent aimed at fully acquiring FTX and covering the liquidity crunch.
Binance also promised to conduct a full assessment in the coming days.
Was it a Binance power move all along?
The announcement of liquidation comes a day after Bankman dismissed reports of liquidity issues as false rumors. Some users in the crypto space believe that the drama is only a smokescreen to cover the FTX sale to Binance.
Despite the foul play and hidden intentions of Binance, the undisclosed letter of intent will reveal its true nature. If the deal goes through, the acquisition of FTX by Binance will be viewed as a power move in the crypto world.
Crypto exchanges will ultimately follow the same roadmap when planning on the takeover of rival or minor exchanges with potential. Previously, Coinbase planned to purchase BTC Turk for $3.2 billion
