FTT price falls amid liquidation claims

FTT price has dropped by more than 12% in the past seven days following some issues with a leaked Balance Sheet of FTX’s sister firm Alameda Research.

In particular, the leaked balance sheet showed an imbalance in Alameda’s financials and triggered fear among investors who have been withdrawing funds including stablecoins from FTX at an alarming rate.

Stablecoins worth more than $451 million have been withdrawn from the FTX exchange in the last seven days according to Nansen data.

What the leaked Balance Sheet showed

The leaked Balance Sheet showed that Alameda Research has $14.6 billion in assets and about $8 billion in liabilities including $7.4 billion worth of loans as of June 2022. Out of the listed assets Alameda owns $3.66 billion in “unlocked FTX token (FTT)” and $2.16 billion in FTT tokens as collateral.

Besides the imbalance, investors also fear that a huge portion of Alameda’s asset holdings is in FTT tokens rather than traditional assets like fiat currencies.

Alameda’s CEO Caroline Ellison later clarified via a tweet that the leaked balance sheet only showed part of the firm’s holding saying that Alameda has an additional $10 billion in assets. However, the clarification did not quell market responses and investors’ fears.

Binance planning to liquidate a huge sum of FTT tokens

Binance received $2.1 billion worth of BUSD stablecoin and FTT tokens when it exited from FTX equity in 2021. Changpeng Zhao, the CEO of Binance, has said that Binance is planning to liquidate a large sum of FTT tokens (more than $500 million worth of FTT) on the market.

For more details on Binance’s FTT token liquidation, you can read this: “Is FTX insolvent? Why is Binance selling FTT? – Deep Dive.“

The increased stablecoin withdrawals and the impending FTT liquidation by Binance are expected to drive the price of the FTX token lower and investors are betting against the token.