FTT Plummeted by More than 80% and BTC Dropped Below the $20,000 Threshold, Indicating a Gloomy Day in Crypto Winter

TL;DR

🔹 The Twitter public debate between CZ and SBF evolved into an acquisition assistance plan.

🔹 FTT suffered a severe setback, with a sharp drop of more than 80%. The crypto market fell overwhelmingly, and BTC dropped below the $20,000 threshold.

🔹 FTX event accelerated more users to keep an eye on the 100% Proof of Margin, and Binance decided to conduct the Proof of Margin.

🔹 "Cryptography" does not mean non-transparency. Since 2020, Gate.io has been working closely with Armanino, a third-party audit company, to provide users with 100% Proof of Margin.


Introduction

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On November 2, Alameda Research, a quantitative asset management company under FTX, was exposed that its balance sheet was unclear, which caused an uproar in the market. On November 6, CZ, Caroline Ellison, and SBF staged a public opinion debate on Twitter, and FTT prices continued to fluctuate in the public opinion warfare. The event was supposed to come to an end on the 7th, but on the 9th, CZ announced on Twitter that it had signed a letter of intent to acquire FTX, which threw another heavy bomb on the market that had just eased.

Event review: Disclosure About Alameda and FTX | How Can Users Avoid Risks When Organizations Are in Chaos?








The Public Opinion War Ushers in a Turning Point and FTX Seeks the Acquisition of Binance

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In the early morning of November 9, SBF tweeted to clarify the current situation about Binance:

1）FTX has reached an agreement with Binance on FTX strategic transactions (details to be determined).

2）Presently, FTX is dealing with the backlog of withdrawal demand and solving the problem of liquidity tightening. This is one of the main reasons for requesting the intervention of Binance.

3）Binance and FTX are two independent companies. The relationship between the two is not as bad as the media.

Later, CZ expressed its intention to acquire, but could not guarantee 100% completion of the acquisition, because there were many uncertainties during the situation.

Intriguingly, under the tweet released by SBF, a popular comment quoted a recent photo of Musk entering the Twitter headquarters for secondary creation, which seems to satirize the current situation between CZ and SBF.

After the release of the acquisition news, FTT price quickly rebounded and exceeded $20, while BNB briefly rose to $370, with a maximum increase of more than 40% within 15 minutes.


Event Further Deteriorated, Market was Bloodwashed

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On the evening of November 8, FTX suspended the withdrawal.

According to CoinDesk, FTX-related employees confirmed in the telegram group that any transfer of FTX except fiat currency will be stopped. The suspension of withdrawal highlighted the deterioration of the exchange, and FTX institutional investors began to worry that their equity would be cleared.

Subsequently, some media revealed that SBF had turned to billionaires on Wall Street and Silicon Valley for help before reaching an acquisition agreement with Binance, in order to obtain $1 billion in aid funds. However, at noon on November 8, the capital gap of FTX had rapidly risen to $5-6 billion. A large number of users realized that the liquidity crisis of FTX was inevitable, and the FTT price immediately plummeted, falling below $3.12 as a minimum, with a one-day drop of more than 80%.

Subject to the subsequent development of the event and the overall decline of the crypto market, BTC fell approximately 17% in a short time, and ETH fell about 23% in a short time. As of 16:00 on November 9, BTC was trading at $18227.8, ETH was trading at $1275.01, and FTT was trading at $4.75, with a 24-hour drop of nearly 83%.

"Cryptography" Does not Mean Non-Transparency

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Currently, the assistance plan of Binance to FTX may be in progress, but if the details of both companies are not finalized as soon as possible, FTX investors may still be in an unstable situation. Meanwhile, some people also believe that the acquisition plan of Binance may not go smoothly, because the regulatory authority may conduct an anti-monopoly investigation on it and have the right to prevent major mergers.

FTT has fallen by more than 80% since Alameda Research was exposed to the ambiguity of its balance sheet on November 2. Avivah Litan, an analyst at Gartner Research, stated, "the market believes that SBF should better and more effectively manage the risk of FTX than it currently does." She argues that the problem of FTX is a "disaster", and "the non-transparent balance sheet and uncertainty are causing chaos to the crypto market".

According to the media's analysis of the blockchain situation, the assistance of Binance actually covered up the problems in FTX. The insiders expect to see the features including better transparency and 100% reserves may not make great progress.

On November 9, CZ tweeted that Binance would start to conduct the Proof of Margin.

Perhaps we shall think about whether this emerging industry should not rely on crashes and lessons to move forward. "Cryptography" does not mean non-transparency. The original intention of the industry is not to be controlled by an individual or institution, so that everyone can retain the right to control their own assets. The best way to ensure the security and transparency of users' assets is not to ask for intervention and apology after the occurrence of the incident, but to conduct a continuous and regular 100% margin audit by an independent third party.

As a centralized digital trading platform, Gate.io always believes that 100% rigid cashing should be the foundation of all CEX. Since 2020, Gate.io has been working closely with Armanino LLP, an independent third-party audit company, to conduct regular margin audits, provide users with 100% Proof of Margin, and ensure the transparency of users' assets. Presently, Gate.io has completed a 100% margin audit this year. Users can view the audit results of Gate.io assets on the Armanino official website.






Author: Gate.io Researcher Jill Ma & Byron B. Translator: Joy Z.
This article represents only the researcher's views and does not constitute any investment advice.
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