As the most powerful crypto exchanges in the world, Binance and FTX have had quite a few frictions in the past. Today, the conflict is upgraded to a new level after their leaders, CZ and SBF, went toe to toe with each other on Twitter.
The story initially started on November 2nd, when CoinDesk published a report about the balance sheet of Alameda Research, the sister company of FTX's. It claimed that as of June 30th, the company's assets amounted to $14.6 billion. Among the assets, $3.66 billion was unlocked $FTT, and $2.16 billion was $FTT collateral. What's more, among Alameda's $8 billion of liabilities, $292 million was locked $FTT. The report was followed by a mood of FUD and controversy from the crypto community.
On November 6th at 14:32 UTC, Caroline Ellison, CEO of Alameda, finally broke the silence. She responded to the report on Twitter, "that specific balance sheet is for a subset of our corporate entities, we have over $10b of assets that aren't reflected there,"
" The balance sheet breaks out a few of our biggest long positions; we obviously have hedges that aren't listed. Given the tightening in the crypto credit space this year, we've returned most of our loans by now. "
The community reacted quickly, once pushing $FTT price to as high as $24.89. However, among those who reacted, there was a big name: CZ. About an hour later, Binance CEO announced the exchange had decided to liquidate any remaining $FTT on its books, "due to recent revelations that have came to light".
"Binance always encourages collaboration between industry players. Regarding any speculation as to whether this is a move against a competitor, it is not. Our industry is in its nascency and every time a project publicly fails it hurts every user and every platform. We typically hold tokens for the long term. And we have held on to this token for this long. We stay transparent with our actions." CZ further explained.
Actually, Binance had started the liquidation before the statement. CZ later confirmed that a transfer of 22,999,999 $FTT to Binance on November 5th was "part of it".
It only took 8 minutes for $FTT to drop $2.22, an over 9% decrease. Caroline Ellison instantly replied. “CZ, if you're looking to minimize the market impact on your $FTT sales, Alameda will happily buy it all from you today at $22!”
The move prevented $FTT from going down further, but it was when SBF himself felt the need to stand out that the situation became more interesting, as it seemed he wanted to find peace. "I respect the hell out of what y'all have done to build the industry as we see it today, whether or not they reciprocate, and whether or not we use the same methods. Including CZ. Anyway -- as always -- it's time to build. Make love (and blockchain), not war." He said on Twitter.
But CZ was clearly not in that mood, and fired directly back at the "make love not war" advice. "Liquidating our $FTT is just post-exit risk management, learning from $LUNA. We gave support before, but we won't pretend to make love after divorce. We are not against anyone. But we won't support people who lobby against other industry players behind their backs. Onwards."
The verbal fight stopped, as least for now, when SBF chose to make clarifications for FTX, instead of contentions against CZ. "A huge thank you to everyone who has supported us-- we're excited to keep climbing together. And especially to those who stay level headed during crazy times. We deeply appreciate it," he said.
"A bunch of unfounded rumors have been circulating. You can see (Caroline Ellison'ss Twitter). FTX keeps audited financials etc. And, though it slows us down sometimes on product, we're highly regulated. We've already processed billions of dollars of deposits/withdrawals today; we'll keep going."
"And in the end you should do what you want, and trade where you want. We're grateful to those who stay; and when this blows over we'll welcome everyone else back."
The exchange of words is probably just a beginning. According to PeckShieldAlert, another 491,500 $FTT has been transferred to Binance today. On FTX side, OKLink shows that over $378 million worth of stablecoins were sent from Alameda to FTX over the last 24 hours. It'll be curious for the crypto community to see what their next moves are.
In terms of token price, $FTT is trading at over $22, the price Caroline Ellison offered to CZ. The 2.06% decrease over 24 hours may not sound horrible, but another token that's heavily related to FTX, $SOL, dropped 11.27% in a day. On the other hand, $BNB went down by 6.11% over 24 hours.
Binance used to be an investor of FTX's, and the two exchanges were close for a while. But it's probabaly fair to say that it's not the case anymore. Apart from competing for market shares as exchanges, they've had frictions in other areas. Not long ago, Binance and FTX both bid for Voyager's remaining asset, with the latter becoming the winner. There are also claims that FTX is close to US regulators, which is a threat for Binance, as CZ said on his Twitter.