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The shocking toppling of FTX, one of the largest and most reputable cryptocurrency exchanges in the world, is leaving those in the crypto space worried for the oncoming ripple effects of the collapse of Sam Bankman-Fried’s (SBF) trading platform.

On Nov. 2, reporter Ian Allison published his findings in a report on FTX that found that roughly $5.8 billion out of the $14.6 billion of assets on the balance sheet of Alamada Research, were linked to FTX’s exchange token FTT.

The findings caused a stir in the crypto sphere as questions were raised about FTT’s true valuation due to the very close relationship between Alamada Research and FTX. Both companies were founded by SBF. With the extent of their fraternal dealings coming to light the market began questioning the real-world, open-market value of FTT held in FTX’s affiliates.

What catalyzed the over 90% crash of the FTT token from $22 to almost $1.60 (at time of writing) was Changpeng Zhao’s tweet regarding Binance’s FTT holdings. The Binance founder, more famously known as CZ, has a long standing relationship with SBF but recent interactions have suggested rising tensions between the two.

In a tweet shared on Nov. 6 CZ revealed his plans to sell all of Binance’s FTT holdings.

“Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books”, the tweet read.

“We will try to do so in a way that minimizes market impact. Due to market conditions and limited liquidity, we expect this will take a few months to complete.” He added.

The tweet increased the already growing concerns of FTX users. Alameda Research CEO Caroline Ellison quickly and very publicly offered CZ an OTC deal to purchase all of Binance’s FTT holdings for $22 each.

Customers were scared of a withdrawal run - this sent FTT and the digital-asset markets into a spiral. With a Solana crashing to $12 as well. A few days after the tweet, FTX was hit with billions in dollars worth of withdrawal requests, causing them to halt withdrawals on all platforms. Sam Bankman-Fried said the firm suffered a ‘giant withdrawal surge’ as users rushed to withdraw over $5 billion from the platform in the span of three days. Daily withdrawals usually ran to tens of millions of dollars.

CZ announced a plan to rescue FTX, agreeing to buy the company through an announcement on Twitter. However, after due diligence, he announced that he was stepping away from the deal, citing: “The issues are beyond our control or ability to help”. After the tweet was sent, crypto Twitter started noticing over $600 million in funds were being siphoned out of FTX’s official wallet - likely being hacked. Many users speculated that SBF and team were running with funds.

On November 15, this report was shared from an unconfirmed source outlining what happened withh FTX/Alameda and how FTX managed to lose all of their users funds:

Regardless of reasons, circumstances, or consequences, this undeniably deals a crushing blow to the entire cryptocurrency industry. Follow Block Journal to monitor this situation as more updates arise.

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