FTT Plummets: Binance Sells Off Holdings, FTX Bankruptcy Spreads to 101 Affiliates

From Empire to Bankruptcy: FTT, Alameda, and the FTX Domino Effect

Binance received approximately $2.1 billion in BUSD and FTT when it exited its stake in FTX. As market rumors swirled about Alameda Research's balance sheet, the company announced its decision to liquidate its remaining FTT holdings via a tweet. This coincided with a market-wide crash that some participants likened to the collapse of Terra-Luna. What began as a fall in an exchange's native token ultimately led to 101 additional affiliated companies being named in FTX's proceedings and the arrest of its founder. As one user summarized, the Federal Reserve wasn't coming to bail anyone out.

Why Did FTT Collapse?

FTT was the exchange's native token and, according to some users, served as collateral for multi-layered leveraged trades, described as a circular scheme where the issuer, guarantor, and holder were the same group. Alameda Research's ledger, FTX's sister fund, was reportedly backed by this self-generated asset. Alameda's CEO even offered via Twitter to buy all the FTT Binance held at $22 per unit. She later denied her firm had sold anything and stated she would provide proof of funds once the situation stabilized.

The Trail of Sales and Solana's Plunge

Alameda wasn't just on the selling side. The fund was a major investor and promoter of Solana, and the network's token fell more than 10% during the thread's unfolding. The BitDAO community demanded proof of funds after detecting sales of its token that allegedly broke a three-year no-sell commitment. One user pointed to an FTT price wall at $14 and questioned who was attempting manipulation.

Is the Contagion Spreading to Other Exchanges?

Doubt spread across various platforms. One user pointed to Crypto.com, Huobi, and Gate.io for cross-lending to appear solvent. The prevailing advice was to move funds to a personal wallet. "Not your keys, not your coins," summarized the principle that was repeated in the thread. BlockFi officially declared bankruptcy, and speculation arose in the thread that other exchanges might trinc suit.

Sam Bankman-Fried's Arrest

His arrest occurred just as he was scheduled to testify, a detail many found suspiciously opportune. According to circulating reports, he faced a battery of charges that could amount to over 50 years in federal prison. Sam Bankman-Fried became the defendant in charge, and some users began tracking reported suicides and bankruptcies. One detail that was discussed: FTX Trading and approximately 101 additional affiliated companies stated that most subsidiaries continued to pay employee salaries as the ship sank.

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The core issue remains, and it's uncomfortable. If no exchange can prove it's just an exchange, how many more holes are being covered up with native tokens and a smile?