Binance has decided to sell all its $FTT, the native token of FTX, the second largest crypto exchange by trading volume The crypto community received a shocker on Sunday when Changpeng Zhao (CZ), the CEO of Binance, said that the crypto exchange had decided to sell off all its $FTT holdings. Note that $FTT is a native token of FTX, the second largest crypto exchange by trading volume after Binance. Different reactions have followed that statement, with $FTT, $BNB and even $BTC plummeting in what looks like the biggest-ever war between industry players. But what is the origin of this messy situation? What implications may it have on the general crypto market, and where do we go from here? Background of the Binance vs FTX drama CZ of Binance announced on Sunday that his company would be liquidating its entire $FTT token portfolio as post-exit risk management. But that was just an immediate cause; remote causes go as far back as 2019. When FTX was launched in 2019, Binance invested in the centralised exchange because CZ foresaw its huge potential. The Sam Bankman-Fried (SBF) founded exchange grew rapidly, dominating the United States market. Related post: Here is all you need to know about the Terra LUNA, UST crash Following that accelerated development, CZ’s Binance decided to divest from its FTX investment in 2021, receiving around $2.1 billion in remuneration in BUSD and FTT, which it had held until now. Before the divestment, SBF was labelled ‘an enemy of DeFi and crypto’ in the community due to his romance with regulators in the United States. He is a huge political donor and has pledged almost $40 million to pro-crypto Democrat campaigns and candidates in the US electoral cycle. A Coindesk report emerged last week stating that Alameda Research, the SBF-founded leading principal trading firm held a total of $14.6 billion in assets and had around $8 billion in liabilities, including $7.4 billion worth of loans. Among its assets, Alameda Research listed that it had $3.66 billion in unlocked $FTT, the FTX exchange’s native token. Concerns around FTX insolvency arose from the fact that a significant chunk of Alameda’s holdings were in FTT, a token created by the firm itself, rather than in traditional fiat currencies or stablecoins. According to analysts, the main issue is that the $FTT token has zero utility and probably no demand. Consequently, the coin may become an illiquid asset putting investors at significant financial losses, similar to the case of Terra LUNA. This made CZ announce the financial decision to liquidate the significant chunk of the $FTT tokens Binance got after exiting FTX equity last year. As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4 CZ 🔶 Binance (@cz_binance) November 6, 2022 Although Alameda Research’s CEO later clarified that the leaked document only presented a portion of the firm’s holdings and added that the firm held a further $10 billion in assets, the clarification could not quell investor fears and prevent a response from the market. As the report reached more users, significant investors began pulling their funds from the exchange. Also, FTX Founder Sam Bankman-Fried took to Twitter yesterday to assure users and investors that the exchange was functioning normally. He called the rumours unfounded, adding that FTX maintains audited financials and is highly regulated. SBF also added that the exchange had already processed billions of dollars worth of deposits and withdrawals. 2) A bunch of unfounded rumors have been circulating. You can see. FTX keeps audited financials etc. And, though it slows us down sometimes on product, we're highly regulated. SBF (@SBF_FTX) November 6, 2022 Notably, In his initial tweet, Zhao said Binance’s sale would be executed in a way that “minimizes market impact” and c...