I’m just writing this as an easily accessible journal entry for the future.
On 11/6/2022, CZ of Binance stated that his firm would be liquidating approximately 500 million USD notional of FTT “Due to recent revelations that have came to light”
Within 16 minutes, Caroline of Alameda Research1 posted that her firm was willing to purchase CZ’s entire market sell from him OTC at $22.
CZ’s response implicitly stated that he was more interested in damaging Sam Bank man-Fried (hereafter referred to as SBF) and FTX than getting good execution on his market sells.
This response alluded to a now deleted tweet from SBF mocking Binance’s grey market nature during a time period when FTX was seemingly making progress on Capitol Hill and providing feedback on rumored DeFi regulations.
FTT’s volatility was highly elevated on the 6th of November following CZ’s tweets, though price has since temporarily stabilized at around the $22 level described by Caroline.
Solana was also heavily effected by the day’s drama, with the token retracing the entirety of it’s move leading up to the Solana Breakpoint event, comparable to their ecosystems Devcon. Solana has historically been a large position of Alameda Research and one of their favorite markets to make, and is a “Sam coin”. Solana has a $10.5 billion FDV at the time of writing and is the 11th largest cryptocurrency by marketcap (8th largest if you exclude stablecoins).
In addition, it appears that Alameda may have been selling Solana to defend FTT’s price at $22. If so, it would seemingly represent a particularly gross example of FTX and Alameda not acting in their own best interest but rather the best interest of FTX-Alameda as a whole.
CZ also drove the knife in further by linking to a blatant FUD thread on November 7th.
At approximately 6:40 p.m. PST 11/7/2022, Solana and FTT began to precipitously decline in price, with Solana devaluing over 7.97% in 15 minutes and FTT devaluing an incredible 18.46% in a similar time frame.
By 10:00 a.m. the following day, Solana was nearly $24 and FTT declined below $10. FTX was reportedly seeking over 6 billion USD to fill holes on it’s balance sheet and match the duration of its assets and liabilities. FTX had only been rumored to be seeking 1-2 billion the previous evening, a sum that was now ballooning out of control. FTX was even rumored to be seeking an acquisition at a valuation of approximately $1 per FTT.
11 a.m. PST. FTT now below $7, GGWP.
Alameda Research is a cryptocurrency focused hedge fund and market maker that was also founded by Sam Bankman-Fried, CEO and founder of FTX. Alameda and FTX have been heavily criticized for the unclear nature of their business partnership. Alameda Research was the only market maker on FTX for multiple years, essentially meaning that a large portion of their revenue came directly out of FTX users pockets.