FTX seems to be falling deep into a pit of despair without an anchor. Crypto exchanges face several problems that threaten the stability of the company. First, it looks like the war is going on between FTX and the Binance cryptocurrency exchange. This is presumed to involve their respective CEOs Sam Bankman-Fried (SBF) and his Changpeng Zhao (CZ).
Binance has announced plans to liquidate its FTT token holdings. There is still no explanation as to why Binance suddenly showed no interest in FTT tokens. However, some believe that Binance may consider holding FTT tokens as a liability of record.
Following the liquidation of FTT tokens by Binance, the situation for FTX has become more complicated. The latter is currently experiencing delays in processing client Bitcoin and stablecoin transfers.
FTX is currently witnessing the collapse of the Ethereum (ETH) reserve. According to data his provider CryptoQuant, the exchange has lost nearly 300,000 ETH in the last two days.
Currently, FTX’s Ethereum reserve is around 108,246.43. This is one of the largest declines recorded since November 2020.
FTX moves to fix ETH reserves
A report on the situation revealed that FTX is making several moves to build its ETH reserve.The company uses subsidiaries and other crypto exchanges. For example, Nansen’s data reveals that SBF-owned Alameda has sent 26,600 ETH to his FTX within the past day.
This transfer left Alameda with a balance of 9,325 ETH. Alameda also uses other cryptocurrency exchanges to send large amounts of stablecoins to his FTX hot wallet.
According to PeckShieldAlert data, FTX has removed 1,985 ETH of liquidity from the Gearbox Protocol. Another SBF firm, Blockfolio, also sent about 13,555 ETH to FTX.
Currently, crypto exchanges have limited node throughput, making it difficult to process Bitcoin withdrawals. Also, a user of the FTX platform complains that it takes from him 5 hours to he 10 hours for the transaction to be executed.
Additionally, the creation and redemption of stablecoins from exchanges has slowed. However, exchanges are blaming banks for slowing the creation and redemption of stablecoins. It said wire transfers would be cleared on Monday when banks opened for business.
FTT Token Drops 10%
The CEO of Binance’s cryptocurrency exchange CZ has announced plans to liquidate its FTT holdings. CZ said action will begin in the coming months. The announcement had a negative impact on FTT as the token fell 10% in the last 24 hours. The coin even reached a low of $22.32.
However, with little volatility in the crypto market, the FTT is starting to show signs of recovery. At the time of writing, FTT is trading at $22.33.
Featured Image From Pixabay, Charts From Tradingview
