Crypto Twitter was flooded with snarky memes when Binance announced that it would buy the FTX crypto exchange and then said it wouldn’t.

But, the world’s biggest crypto exchange was still left holding about 5% of the total supply of FTT, which is the native token of the FTX crypto exchange, which was worth $65 million at the time of writing.

FTT

FTX’s native utility token gives discounts on trading fees to those holding it. The FTT token works as a customer loyalty program.

The more tokens a user has, the bigger discount they can get in their trading fee, or at least this is how it functioned previously.

According to an individual familiar with the due diligence of Binance on its deal with FTX, they had not been able to sell a lot of FTT holdings before the announcement of backing out of the deal.

On Saturday, Binance moved its FTT holdings that initially sounded the alarm, which had been valued at $580 million previously, but then came down to $89 million.

Trouble had first begun for the FTX crypto exchange in the previous week when reports indicated that FTT comprised $5 billion of the balance sheet of Alameda Research which was valued at $14 billion.

The response

Alameda and the FTX crypto exchange were both launched and owned by Sam Bankman-Fried, but the former FTX CEO had always maintained that they were two separate entities.

After the news, Binance began to liquidate its FTT position which pushed a crowd of retail traders and investors to follow in the same footsteps.

This drove down the price of FTT and put FTX in a liquidity crunch, from which the crypto exchange was not able to recover ultimately.

Binance had a big FTT position because its shares of equity in the FTX exchange had been bought last year with stablecoins the FTT.

According to a source familiar with the matter, Binance had decided to sell its equity in FTX in 2021 because of strong concerns and disagreements about its relationship with Alameda Research.

The current position

At the time of writing, the wallet in which Binance’s FTX tokens were kept still has about 17 million tokens, which are valued at $65 million.

This means that about 5% of the total FTT market supply still belongs to Binance. There has been an 85% drop in the price of FTT in the previous week.

CoinGecko revealed that the price had dropped to $3.80 from $24.39. The daily trading volume of the token had been between $50 million and $100 million.

But, the day after Changpeng Zhao, the CEO of Binance, confirmed that they were selling their FTT holdings, the trading volume rose to a whopping $1.6 billion.

On Wednesday, after Binance announced that it was not buying FTX, the trading volume once more shot up to $4.4 billion.

Things have only gone downhill for FTX since then, resulting in renewed concerns about the crypto contagion that has resulted in disaster this year.