Reports said that Binance's decision to liquidate 23 million FTT tokens triggered FTX's liquidity crisis.
It has been reported that a user on Twitter commented, “Who needs Netflix when you are in crypto?” as the crypto industry attempted to digest the acquisition of cryptocurrency exchange FTX by its rival Binance. The deal, disclosed on November 8, has been compared to a “chess move” by some, insinuating that Binance's strategy intentionally led to the deal.
However, users on Twitter claimed that “CZ just executed the most gangster play we've seen in Crypto, ever, period,” referencing the series of tweets from Binance CEO Changpeng Zhao (CZ) that triggered the acquisition.
The report said that for a brief recap, in a Nov. 6 tweet, Zhao announced the decision to liquidate Binance's position on FTX token (FTT) was made after “recent revelations that have came to light,” citing “post-exit risk management" reasons. FTX founder and CEO Sam “SBF” Bankman-Fried took to Twitter on November 7 to claim that a competitor was trying to go after the cryptocurrency exchange with false rumors.
Likewise, the series of tweets triggered a sell-off of FTX Token that broke below the pattern’s support line near $22.50, accompanied by a volume spike. The sell-off continued below the support line, and the token is down over 57% in 24 hours, negotiated at $9.70, as of November 8.
In a message to FTX's staff this morning, SBF said that $6 billion of the net had been withdrawn from the platform in 72 hours, leading the exchange to “effectively pause,” adding that the situation would be resolved in “the near future,” according to reports.
Thus, on November 8, both SBF and CZ announced the acquisition, citing a “liquidity crunch,” implying that Binance's equity liquidation led to FTX's insolvency. FTX's CEO chose to seek a “bailout from the competitor that triggered the bank run in the first place,” wrote a user on Twitter regarding the legal options the exchange had during the liquidity crisis.