It looks like FTX is plunging deeper into its pit of despair without an anchor. The crypto exchange is facing several issues threatening the stability of the firm. Firstly, it appears that there is a war going on between FTX and Binance crypto exchange. It is believed to include their respective CEOs, Sam Bankman-Fried (SBF) and Changpeng Zhao (CZ).
Binance announced its plan to liquidate FTT token holdings, which it executed. There is still no explanation for Binance’s sudden lack of interest in the FTT token. However, some believe that Binance may consider keeping the FTT token on its records as a liability.
After Binance’s liquidation of the FTT token, things are getting more complicated for FTX. The latter is now facing delays in processing bitcoin and stablecoin transfers for its customers. The natural result of the incidents is undermining users’ confidence in FTX.
FTX is currently witnessing the collapse of its Ethereum (ETH) reserves. According to data provider, Cryptoquant, the exchange has lost around 300k ETH in the past two days.
At the moment, FTX’s Ethereum reserves are around 108,246.43. This is one of the biggest drops recorded since November 2020.
FTX takes steps to recover ETH reserves
Reports on the situation show that FTX is taking some steps to build up its ETH reserves. The firm is using its subsidiaries and other crypto exchanges. For example, Nansen Data revealed that SBF-owned Almeida moved 26,600 ETH to FTX in the past day.
This transfer left Almeida with a balance of 9,325 ETH. In addition, Alameda has sent a large amount of stablecoins to the FTX hot wallet using other crypto exchanges.
According to data from PeckShieldAlert, FTX has removed 1,985 ETH of liquidity from the Gearbox protocol. In addition, another SBF company, Blockfolio, moved approximately 13,555 ETH to FTX.
Currently, the node throughput of the crypto exchange is limited, making it challenging to process bitcoin withdrawals. Furthermore, users of the FTX platform now complain that transactions are delayed by 5 to 10 hours before execution.
Additionally, the creation and redemption of stable coins from the exchange has been slow. But the exchange blamed banks for the slowdown in stablecoin creation and redemption. It said that the wire transfer will be cleared on Monday after the bank opens.
FTT token down 10%
The CEO of Binance crypto exchange, CZ, announced the firm’s plans to liquidate its FTT holdings. CZ mentioned that the action will begin in the next coming months. This announcement negatively affected FTT as the coin fell 10% over the past 24 hours. The coin also hit a low of $22.32.
However, due to the slight volatility in the crypto market, FTT has started showing signs of recovery. At press time, FTT is trading at $22.33.
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