FTX’s token plunges 80% on liquidity concerns, wiping out over $2 billion in value
FTT, the token native to crypto exchange FTX, lost most of its value after rival Binance, the world’s largest cryptocurrency firm, announced plans to acquire the company.
The coin traded at around $22 on Monday and sank below $5 Tuesday afternoon in New York. The selloff wiped out more than $2 billion in value in the space of 24 hours.
Binance CEO Changpeng Zhao, known as CZ, wrote in a tweet to his more than 7 million followers that he expects FTT to be “highly volatile in the coming days as things develop.”
Cryptocurrencies as a class sank on Tuesday, with bitcoin and ethereum both plunging more than 10%. Shares of crypto exchange Coinbase also experienced a double-digit percentage drop, while Robinhood, which traders use to buy and sell crypto, fell by about 19%.
“It’s probably the most dramatic deal I’ve ever seen in the history of the crypto industry,” said Nic Carter, a partner at Castle Island Ventures, which focuses on blockchain investments. “It consolidates basically the two largest offshore exchanges into one entity, an absolute coup for CZ and Binance — and really a disaster for FTX.”
The agreement between the two companies is non-binding and follows what FTX CEO Sam Bankman-Fried called “liquidity crunches” at his firm, which was valued at $32 billion in a financing round earlier this year.
The acquisition impacts only the non-U.S. businesses for FTX. The U.S. division will remain independent of Binance. However, according to a 2021 audit, the U.S. part of FTX accounted for just 5% of total revenue. FTX is based in the Bahamas, where Bankman-Fried resides.
Like many crypto companies, FTX created its own token called FTT, which could be purchased like bitcoin though it wasn’t as widely available. Owners of FTT were promised lower trading costs and the ability to earn interest and rewards like waived blockchain fees. While investors can profit when FTT and other coins increase in value, they’re largely unregulated and are particularly susceptible to market downturns.
In 2019, Binance announced a strategic investment in FTX and said that as part of the deal it had taken “a long-term position in the FTX Token (FTT) to help enable sustainable growth of the FTX ecosystem.”
Because of Binance’s central position in crypto and its large ownership of FTT, the company had particular sway over FTX and the market’s view on the company. Investor confidence in FTX was rocked over the weekend when Zhao tweeted that Binance would sell its holdings of FTT.
Zhao said Binance had about $2.1 billion worth of FTT and BUSD, its own stablecoin.
“Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books,” he said.
FTT, which peaked at around $78 in September 2021, was trading at close to $25 the day before Zhao’s tweets. It plunged below $16 on Monday and then fell off a cliff after the deal got announced Tuesday. According to CoinMarketCap, the value of FTT’s circulating supply is about $735 million, down from $2.9 billion on Monday.
Bankman-Fried said that in the 72 hours leading up to Tuesday morning, there had been roughly $6 billion of net withdrawals from FTX, according to Reuters. On an average day, net inflows are in the tens of millions of dollars.
“The fact that Sam was willing to do this deal suggests that FTX was deeply impaired in terms of the run on the bank that began in the last 48 hours,” said Carter. “We don’t know exactly what the issue was, whether they were lending out or gambling with user deposits.”
FTX did not respond to CNBC’s multiple requests for comment.
Earlier on Tuesday, FTX had halted withdrawals from its platform, after spooked investors attempted to pull their funds — in a move that resembled the collapse of other crypto firms this year, including Celsius, Voyager Digital and Three Arrows Capital.
News on FTT sparked concern about Alameda Research, Bankman-Fried’s trading firm and sister company to FTX. A report last week on the state of Alameda’s finances showed a large portion of its balance sheet is concentrated in FTT and its various activities leveraged the token as collateral. Alameda has disputed that claim, saying FTT represents only part of its total balance sheet.
“If the price of FTT goes way down, then Alameda could face margin calls and all kinds of pressure,” said Jeff Dorman, chief investment officer at digital asset firm Arca. “If FTX is the lender to Alameda then everyone’s going to be in trouble.”
— CNBC’s Kate Rooney and Tanaya Macheel contributed to this report.
On today’s informative episode of Quick Charge, we’ve got Honda engineers Jason Hwang and Emilio Sanchez to talk us through some of the things that make the GM Ultium-based Honda Prologue EV feel like a real Honda, and why that matters.
Jason and Emilio talk about some of the choices they made to make the Honda Prologue and Acura ZDX feel different from its GM-branded cousins, and explain why this was much more than a case of badge-engineering. Give it a listen, then let us know what you think of the Prologue and ZDX in the comments.
Today’s episode is sponsored by BLUETTI, a leading provider of portable power stations, solar generators, and energy storage systems. For a limited time, save up to 52% during BLUETTI’s exclusive Black Friday sale, now through November 28, and be sure to use promo code BLUETTI5OFF for 5% off all power stations site wide. Learn more by clicking here.
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Read more: All my favorite EVs, racecars, and robots from Electrify Expo Austin.
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The first EV charging hub funded by the Charging and Fueling Infrastructure (CFI) Program in the Eastern US is now online in Deerfield, Massachusetts.
The town installed the region’s first DC fast chargers (four ports), along with four Level 2 chargers, at 59 North Main Street in South Deerfield.
These new charging stations, funded with $2.46 million from the CFI program, are conveniently located near Interstate 91 in Franklin County, the most rural county in Massachusetts, which serves drivers from Connecticut up to the Canadian border.
The hub also features local and regional bus stops and designated bike lanes with secure onsite bike racks. The chargers are meant to cater to everyone: from local residents and visitors to municipal EVs and commercial vehicles that service the region’s businesses, like those in food and beverage manufacturing.
Gabe Klein, executive director of the Joint Office of Energy and Transportation, sees this as a model for future projects:
Multi-modal charging hubs in communities are key to giving more people the choice to ride and drive electric. The Town of Deerfield is showing leadership in building out convenient charging infrastructure that brings new transportation choices to rural and disadvantaged communities while supporting local commerce.
In recent years, Deerfield has experienced increased climate change-driven flooding from nearby rivers, including the Deerfield River, the Connecticut River, and the Bloody Brook. The project incorporates environmental engineering designed to mitigate and adapt to the effects of flooding and climate, including the installation of permeable asphalt and rain gardens, planting of native trees, grasses, and shrubs, and the creation of new greenspace in the center of Deerfield.
The Biden-Harris administration’s CFI Grant Program is expanding EV infrastructure nationwide. It offers grants for projects that complement and expand upon the initiatives of the NEVI program in urban, rural, and disadvantaged and low-income communities. So far, the CFI Grant Program has allocated over $1 billion to nearly 100 projects across the US, encouraging private investments and expanding the EV charging network to make EV ownership more practical and convenient.
Read more: The US reaches milestone of 200,000+ public EV charging ports
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Kia’s upcoming EV4 electric sedan was just spotted testing in the US for the first time. The low-cost EV is expected to make its big debut by the end of the year. Here’s a look at the new model.
The EV4 will round out Kia’s new “EVs for all” master plan launched last year. Kia showcased three new models, the EV3, EV4, and EV5, during its first annual EV Day in October 2023.
During the event, Kia outlined its new global strategy to “lead and accelerate the EV revolution” with a wide range of models priced from $30,000 to $80,000.
Kia plans to rapidly expand its lineup with a series of smaller, lower-priced models. It launched the EV9, its first three-row electric SUV, which is already proving to be a hot seller in the US. Starting at under $55,000, the EV9 is still a great deal compared to others in its class, but Kia plans to go even lower.
The EV3 and EV4 are expected to be among the most affordable electric vehicles when they arrive in the US.
Kia’s new EV4 is now testing in the US
Ahead of its official debut, Kia’s new EV4 sedan was recently caught driving on US streets for the first time.
The latest image from KindelAuto doesn’t reveal much more than what’s been shown in the past, but the fact that it’s now testing in the US is significant.
Kia’s EV3 is already on sale in Korea, starting at around $30,000 (42.08 million won). Earlier this week, the company said its new compact SUV is now available across Europe, starting at around $38,000 (36,000 euros) with a “segment-leading range” of up to 375 miles (WLTP).
Next up will be the EV4. Kia is expected to officially reveal the new EV by the end of the year, with deliveries starting in 2025. It could be as soon as next week at the 2024 LA Auto Show.
The interior will feature Kia’s advanced new ccNC infotainment system with dual 12.3″ navigation and driver display screens. An otherwise minalimalistic design is expected inside.
Kia’s EV4 will also be available in a hatchback variant. Although the hatch is likely aimed at European buyers, it was also recently spotted testing in the US for the first time.
We will learn official prices closer to launch, but the EV4 is expected to start at around $35,000 to $40,000.
Kia is teasing five new vehicles for the US, at least one being a new EV, that will debut at the LA Auto Show next week. Will it be the EV3? EV4?
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