NewsletterCan FTX and Alameda Be The Next Big Crypto Insolvency?
The crypto winter resulted in a liquidity crisis for some major crypto firms. Companies such as Three Arrow Capitals, Celsius, and Voyager suffered massive hits during the crypto market. The Crypto community is now fearing that giants FTX and Alameda can face a major liquidity crisis and insolvency.
The second richest crypto billionaire Sam Bankman-Fried is the founder of both FTX and Alameda.
Binance CEO Changpeng “CZ” Zhou recently announced that Binance will liquidate all its FTX token holdings.
Why FTX And Alameda Face A Crisis
The liquidity crisis surrounding Alameda is once again in the news. Alameda has major exposure to FTX tokens. Reports reveal that of the $14.6 billion assets owned by Alameda on the 30th of June, unlocked FTT tokens accounted for the single largest $3.66 billion. Binance’s CZ announced that the company will gradually sell all its FTT holdings. $584 million worth of FTT has already been transferred to the Binance exchange.
CZ claims that he wants to reduce the market impact of the liquidation. However, Ran Neuner, a CNBC crypto trader, believes that he may be holding the tokens to cause maximum damage to FTX and Alameda. He also reveals that Alameda has leveraged FTx tokens. If there is enough selling pressure, they can face a margin call or liquidation. FTT has fallen close to 12% in the last 7 days.
Dylan LeClair, a senior analyst at UTXO Management, also reveals the liquidity crisis facing Alameda. Caroline Ellison, the CEO of Alameda Research, offered to buy FTT from Binance at $22. LeClair believes that this is because the company has a vested interest in not letting the market price go below $22. This increases the concerns regarding a potential Alameda and FTX insolvency.
Can FTX Face A Similar Insolvency As Celsius
Cory Klippsten, the CEO of Swan Bitcoin, showed concern over the news that Binance has transferred over $560 M worth of FTT to the exchange. He believes that FTX has major insolvency issues and considers it to be technically insolvent. Lark Davis, a major crypto influencer, stresses to his followers to get their crypto out of FTX.
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