Binance CEO Changpeng "CZ" Zhao threw an unexpected roundhouse at rival exchange FTX on Sunday, declaring his company would dump its holdings of FTT.
That's the token that FTX customers can use to obtain perks and discounts on the platform, but whose trading price also serves as a proxy for the prospects of FTX.
Since then, the FTX CEO, Sam Bankman-Fried (SBF), and the Binance CEO, CZ, have had a taste of each other in a couple of tweets.
CZ and Sam have been going back and forth on Twitter over the past 48 hours. So what has happened, and how did we get to this point?
The Feud Between the Exchanges
The war between two of the biggest bosses in the crypto space, Binance CEO Changpeng Zhao and FTX CEO Sam Bankman-Fried (SBF), seems to be just picking up steam and is currently the most heated issue for the market.
The drama began early Sunday morning when FTX's FTT token took a sudden drop as rumors surfaced that a giant whale with 23 million FTT, probably Binance, might be dumping its tokens. Shortly after, the price of FTT started to drop by 10%.
"Liquidating our FTT is just post-exit risk management, learning from LUNA," CZ wrote on Twitter, referring to the infamous algorithmic stablecoin imploded this spring.
The leaked balance sheet—which FTX founder Sam Bankman-Fried (SBF) says shows only a portion of Alameda's total assets—provides more fodder for critics who say there is an unhealthy overlap between SBF's trading company and his exchange.
But there is more to Binance's decision to sell off his FTT tokens, as CZ suggested.
Fears spread like wildfire on Twitter that the downturn could trigger liquidations for FTX, leading to a Terra Luna-style "death spiral."
Some users accused SBF of running a fraud scheme with the FTT token.
CZ vs. SBF: War Time
There's bad blood between the crypto industry's most prominent names and, thus, the two largest exchanges, Binance CEO, CZ, and FTX CEO, SBF.
Over the past 48hrs this bad blood has become quite public.
Arguably, CZ has had a distaste for SBF's political lobbying recently, and perhaps CZ sees the lobbying will be to the detriment of Binance's operations in the US and across the globe.
Last week, FTX bigwigs aimed at CZ over the ongoing lobbying. CZ is not impressed that the FTX guys are calling him out publicly.
Further fuel to the fire is rumors that FTX helped launch a FUD campaign against Binance recently. Where Binance allegedly facilitated trading for sanctioned Iranian firms.
The case for CZ to be a little bit fed up with the actions of the guys at FTX is fairly strong.
And it looks like CZ chose to act on that emotion these past few days. As a result, it is causing a sharp sell-off in FTX native token, $FTT.
According to a report by Coindesk, Alameda's balance sheet is largely supported by the FTT token and thus on shaky ground.
The $5.82 billion in FTT recorded on Alameda's balance sheet as of June 30 compared to a total value of just $3.32 billion for the entire FTT offering that day.
Of course, Alameda head Caroline Ellison stepped in to clarify the resulting FUD surrounding the CoinDesk report. This helped $FTT recover and the market settle - albeit momentarily!
Despite the clarifications, CZ stepped in and used this as an opportunity to inform the market that they would be dumping $FTT over a few months - a tactic perhaps to scare off investors for a prolonged period.
Final Thoughts
For the better of the industry, let's hope that they can put things aside and come to some general agreement.
If this situation is part of CZ's master plan to get more users over to Binance, he is winning. Most of the stablecoin flow is going from FTX to Binance.
SBF's s recent response hopefully quashes some fear surrounding FTX's ability to maintain operations. 'FTX is fine. Assets are fine.'
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