Binance-FTX saga: A crypto cold war is brewing — a timeline

Binance CEO Changpeng Zhao (CZ) [Image Source: Coindesk]

A full-scale crypto cold war in the sector might be sparked by a dispute between Changpeng Zhao and Sam Bankman-Fried, the founders of two of the largest cryptocurrency exchanges.

Binance CEO Changpeng Zhao (CZ) recently made an announcement that the exchange would be selling up its whole portfolio of FTT tokens as a post-exit risk management.

As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4

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— CZ Binance (@cz_binance) November 6, 2022

Binance previously held a stake in crypto exchange FTX, whose native coin is known as FTT.

FTX was founded by Sam Bankman-Fried.

When Binance cashed out of that investment last year, it made $2.1 billion in Binance USD and FTT currencies. According to Bloomberg, Binance has roughly 23 million FTX tokens, which are worth about $529 million at current pricing.

Let’s take a look at how we got here:

2019:

Bankman-Fried was the new kid on the block when he started FTX in 2019. Binance, which had been created in 2017, had risen to become the world's largest cryptocurrency exchange by that time.

2019:

Binance invested in FTX and had said that "FTX would help build  out liquidity and institutional product offerings across the Binance ecosystem."

2021:

Binance announced in July 2021 that it was selling its stake in FTX. The exit happened during FTX's $900 million funding round of that year.

2021-22:

Bankman-Fried became increasingly active in US regulation as FTX grew bigger. He also became one of the major donors in crypto and was the second largest donor to US President Joe Biden.

Nov 2022:

A CoinDesk report showed that FTX's trading arm, Alameda, had $14.6 billion in assets. However, most of the assets on the balance sheet were FTX's own FTT tokens.

This public spat on Twitter has led to the plummeting of the FTT token. It dropped by around 20 percent on November 8 morning. Further, FTT is trading down 19 percent at $17.93. SOL is lower by 17 percent and Serum's SRM token is down 10 percent. This has also led to bitcoin which is down 5.6%.

The industry fears that this could lead to a liquidity problem for FTX and could repeat a Luna-type collapse with a cascading effect on the global crypto ecosystem.

According to CoinDesk, FTX saw a massive stablecoin exodus, with $451 million being sent off the platform last week, and $15 million being pulled from its US subsidiary. Currently, FTX has a balance of $59.2 million USDC and $28.5 million USDT, along with $8.6 million BUSD. FTX US has $41 million USDC, $12.8 million USDT, $39 million PAX, and $11.3 million BUSD available.