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A feud between Sam Bankman-Fried and Changpeng Zhao is wreaking havoc on the cryptocurrency market over the last 24 hours.
While there could be numerous reasons for the crash and why Zhao decided to sell a token linked to Bankman-Fried’s FTX, a deleted tweet could hold some answers.
What Happened: FTX and Binance, led by Bankman-Fried and Zhao, respectively, are two of the biggest cryptocurrency companies in the world. Zhao made headlines this week when he announced Binance would be selling FTT FTT/USD tokens.
A Twitter thread points to a war between Zhao and Bankman-Fried dating back to 2019, with the two companies seen as rivals. Binance was founded in 2017 and quickly became a leader in the space. Two years later, the creation and launch of FTX put pressure on Binance, as it also quickly became a leader.
In 2019, Binance invested in FTX, in a move that could have been done to keep tabs on a leading competitor.
FTX and Binance are the two largest cryptocurrency exchanges in the world in 2022. A bit of a battle between the two recently transpired.
One of the first items that escalated the battle was Bankman-Fried pushing for more regulation in the cryptocurrency industry, a move that made him an enemy to many in the sector.
The Twitter thread also points to Bankman-Fried being one of the largest donors to the presidential campaign of Joe Biden and in politics generally. Zhao said he wouldn’t support those who lobbied behind his back, in what could have been a reference to Bankman-Fried.
Bankman-Fried may have escalated a war with Zhao with an Oct. 29 tweet that said “excited to see him repping the industry in DC going forward! Uh, he is allowed to go to DC, right?”
The tweet, which may call into question Binance and Zhao’s relations with China, was later deleted by Bankman-Fried.
SBF understands that in order to one day beat Binance, he needs to leverage US politics as a weapon.
And he also knows his angle. CZ was born in China & there are rumors of Chinese involvement with Binance.
As US<>China tensions rise, he has an angle to attack Binance. pic.twitter.com/FZHAGxBkQ0
— Alex Valaitis (@alex_valaitis) November 7, 2022
This tweet from Bankman-Fried may have been enough to push Zhao into taking action against the rival company. Knowing the price of the FTX token was linked to FTX’s investing arm, Zhao may have sought to put pressure on the price of the token and put pressure on FTX overall.
Binance had over $2 billion in FTT that it was able to sell. Zhao announced that Binance was selling the stake as part of its “post-exit risk management” while also mentioning it learned from the LUNA collapse.
Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won’t pretend to make love after divorce. We are not against anyone. But we won’t support people who lobby against other industry players behind their backs. Onwards.
— CZ 🔶 Binance (@cz_binance) November 6, 2022
Related Link: Binance To Acquire FTX.com As It Faces Liquidity Crunch: Here Are The Early Details
Why It’s Important: The price of FTT dropped significantly on Monday night and took down the cryptocurrency market with it. The market capitalization of the overall cryptocurrency market fell from over $1 trillion back down to the nine-figure range Tuesday.
Zhao may have rattled the cryptocurrency markets with his comparisons to learning a lesson from the Luna crash. In the middle of a bear market, investors are more impacted by risks and fear spread across social media.
FTX account holders began liquidating their positions and withdrawing funds. This led to a bank run of sorts on FTX and questions of liquidity for the company. Reports of withdrawals being halted hit the internet Tuesday morning; Bankman-Fried later said withdrawals were never halted.
With FTX facing liquidity concerns and seeing investors exit, Binance could stand to benefit as a competitor and a company that hasn’t shown the same signs of liquidity concerns.
As investors were dissecting the news and impact from the selloff Tuesday, the leaders of Binance and FTX made a surprising announcement.
“This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days,” Binance CEO Zhao tweeted.
Zhao said there is a lot to cover with the news and it will take time to complete and communicate.
Bankman-Fried said FTX asked Binance to come in and help with liquidity issues and said the important thing is that customers are protected. The FTX co-founder said reports of conflicts between Binance and FTX were exaggerated.
At the time of writing, the market capitalization of the cryptocurrency market is $901.55 billion.
The crypto market has lost $153.3 billion in market capitalization since Sunday night, with Bitcoin BTC/USD and Ethereum ETH/USD seeing big losses and withdrawals. The cryptocurrency market has been rattled by the sale of the FTT token and also the acquisition news and liquidity concerns.
All of this may have started from a tweet that amplified a feud.
Read Next: The FTT Debacle: Want To Cash In? Here’s What Experts Said After Binance Selloff
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Image and article originally from www.benzinga.com. Read the original article here.