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FTX Insolvency Rumours Hit Cryptocurrencies

Steve Miley trader
Updated 8 Nov 2022

Trade Cryptos Here Your Capital Is At Risk

Rumoured financial issues at a major cryptocurrency exchange, FTX, have seen its native token, FTT, plunge lower. These rumours were fuelled by comments from the CEO of Binance and pulled the broader cryptocurrency market lower on Tuesday.

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FTX’s Financials Questioned

The financial position of major cryptocurrency exchange, FTX, was rumoured to be under pressure with buzz of insolvency across social media platforms. Although this has been strenuously denied from within FTX, the FTX coin, FTT, has plunged lower.

Binance Liquidating FTX Token Holdings

Back on Sunday, the CEO of the world’s largest cryptocurrency exchange, Binance, announced they were selling the FTT coin. In a Tweet, the CEO of Binance, Changpeng “CZ” Zhao, said:

Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books.” This was followed by another Tweet that said that the FTT liquidation was “merely post-exit risk management,” highlighting lessons learned from Terra Luna Classic’s (LUNC) collapse and the impact it had on market participants.

Nevertheless, the damage was done.

The decision by Binance could have been linked to a recent balance sheet statement from FTX Founder Sam Bankman-Fried’s Alameda Research, a subsidiary of FTX. It stated that Alameda’s assets are worth billions of dollars and are linked to the FTX coin.

Broader Cryptocurrency Market Feels Pressures Too

And it was not only the FTT token that was lower, driven by the above-mentioned rumour mill, The wider cryptocurrency space all saw notable losses into Tuesday’s trading, with this story the primary driver. Bitcoin (BTC) and Ether (ETH) were down approximately 5% and 6%, respectively.

Steve has 29 years of financial market experience including 3 years at Credit Suisse and 15 years at Merril Lynch. Steve is the Academic Dean for The London School of Wealth Management and has won many awards from Technical Analyst Magazine.