Changpeng Zhao, the billionaire cofounder and CEO of Binance, said on Sunday that his cryptocurrency exchange is selling all its remaining tokens of FTX, fellow billionaire Sam Bankman-Fried’s trading platform, that are worth about $580 million.
Zhao wrote on Twitter that the decision to offload 23 million tokens, called FTT, was due to “recent revelations that have come to light,” without giving more details. He later added that it was “post-exit risk management, learning from Luna,” referring to the failed crypto coin, but stressed that the move was not against a competitor.
Issued by Bahamas-based FTX, FTT tokens grant its holders a discount on trading fees and access to more features on the crypto derivatives trading platform. The cryptocurrency is worth nearly $3 billion over a 24-hour period as of Monday, data on Coingecko shows.
The liquidation is part of Binance’s exit from FTX equity that started last year, when Binance received about $2.1 billion in Binance USD (the stablecoins issued by Binance) and FTT tokens, Zhao disclosed. The latest withdrawal of FTT coins will take a few months to be completed.
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Binance was aiming to “de-risk” its platform after seeing “alarming trends” in the balance sheet of companies tied to Bankman-Fried, according to a person close to Binance who asked not to be identified as the information is not public. Binance declined to comment.
Last week, crypto-focused news site Coindesk reported that Alameda Research, the sister quantitative trading firm of FTX, is made up largely of FTT tokens. The claim was later refuted by Alameda Research CEO Caroline Ellison, who said the report failed to reflect another $10 billion worth of the firm’s assets and that it has taken hedges.
Following Zhao’s announcements, Bankman-Fried wrote on Twitter that he respects what people have done to grow the crypto industry and pointed to Zhao. FTX didn’t immediately respond to a request for comments on Monday.
Binance announced its strategic investment in FTX in 2019, shortly after the crypto derivatives exchange was founded in Hong Kong. A year later, Zhao told Forbes that Binance had given up its equity stake in FTX, saying it’s part of “a normal investment cycle” following FTX’s tremendous growth.