Over $1 billion users’ funds is currently missing on FTX crypto exchange .
According to Reuters, two insider with the knowledge of the exchange’s operations, affirm that founder Sam Bankman-Fried secretly transferred $10 billion of customer funds from FTX to Bankman-Fried’s trading company Alameda Research,
FTX has reportedly filed for bankruptcy after a reported LOI acquisition with Binance fell through. The latter later backed out of the deal.
A background of the drama
Recall that Binance CEO Changpeng Zhao confirmed Sunday evening that the company had decided to liquidate all of its FTX (FTT) tokens due to “recent revelations.” This groundbreaking announcement came amid rumors about the alleged financial troubles of Alameda Research, a major trading firm closely linked to FTX.
A back-and-forth between the two crypto giants escalated. In a scathing tweet, FTX co-CEO, Ryan Salame said that Zhao was “literally the worst.”
FTX boss Sam Bankman-Fried himself took to Twitter earlier today, adding more fuel to the drama. Bankman-Fried claims that FTX’s competitor is attempting to go after his company by spreading “false rumors.” He stressed that the company’s financial situation is fine.
“FTX has enough to cover all client holdings,” he added.
$FTT facing a massive sell off?
The crux of the whole issue lies with fears over Alameda Research’s financials and its close liquidity ties to the FTX exchange. This is a worry for investors, particularly after Changpeng Zhao withdrew all liquidity held in FTX’s token.
Following that development, investors have since begun distributing their $FTT investments. Trading volumes for $FTT have increased and massive sales have pushed the token market price to $22, its lowest point since the mid-June lows.
Additionally, according to data from Coinmarketcap, FTT’s trading volume at press time is $653 million, a 26% increase in the last one day and the highest daily trading volume the altcoin has recorded in the last six months. The surge in trading volume without a corresponding price growth creates a price/divergence indicative of increased selling in the last one day.
Also, Santiment data shows that social discussions around FTT in the past 24 hours have been at its highest in the past six months. FTX, FTT, and SBF occupy the first three spots on Santiment’s list of top trending words in the last 24 hours. There is a correlation that exists between a crypto asset’s social activity and its price. But in the case of FTT, a surge in such social activity without a corresponding growth in its price suggests negative sentiments that usually leads to a price drop.
Going forward, if the price of $FTT falls below $22, a panic sell-off similar to the May Terra debacle might be imminent. With DeFi and FTX-related assets likely to collapse. In view of this, FTX and Alameda Research must protect the $FTT token price above $22.