Alameda financial situation sparks controversy! FTX and Binance camps clash as top executives engage in heated discussions on social media. Key points of contention include Huobi, Benson, and Wu.

CoinDesk "claims" to have obtained confidential financial documents from the trading institution Alameda Research, revealing that it used assets such as FTT, SRM, SOL on the FTX exchange as collateral for borrowing, with debts reaching as high as 7.4 billion, sparking discussions in various circles. There is concern that if the market declines, it may pose systemic risks. Details of the event: Alameda's off-balance sheet assets and liabilities, holding 60% of the total circulation of FTT, raising concerns that further volatility could lead to insolvency.

Although these financial documents have not been confirmed, neither Alameda nor FTX has publicly responded. This incident has not only caused a stir in the Western crypto Twitter community but has also generated a lot of discussion in the Chinese community. Binance co-founder He Yi, FTX executive Ryan Salame, Taiwan FTX community partner Benson, and well-known media figure Colin Wu have engaged in a "debate." Below is a summary:

He Yi mocks FTX, FTX Executives Respond in Chinese

On November 3, the Chinese Twitter account @hellosuoha questioned why there has been a constant stream of negative news about FTX lately and suggested switching to Binance one day. Binance co-founder He Yi responded directly to FTX:

"Oh! Because Binance doesn't offer unsecured loans, doesn't engage in trading, doesn't blindly acquire companies, doesn't blindly spend money on sponsorships, and 20% of FTX's equity has already been sold. Stand tall as a person, focus on doing your job."

The response mocked FTX and Alameda's funding sources and usage, FTX's extensive acquisitions of companies, and sponsorship of celebrities, while also bringing up the history of the split between the two giants.

He Yi's response triggered a retaliation from Ryan Salame, the Co-CEO of FTX Digital Markets, who responded in Chinese, having studied in Shanghai: "Indeed, Binance has its unique way of doing business," and attached news of Binance founder Zhao Changpeng denying an investment in the Indian exchange WazirX after allegations of money laundering. Related information: Is it a cut? Binance's Indian platform WazirX under scrutiny for money laundering, Zhao Changpeng: The acquisition was never completed. This issue remains a mystery as WazirX's founders insist on being acquired by Binance.

Nevertheless, Ryan Salame did not provide any concrete information regarding Alameda or FTX.

Crypto Celebrities Clash: Benson, Wu's Remarks

On November 4, Benson, a partner in the Taiwan FTX community, expressed his dissatisfaction with the spread of FTX's "fud" rumors, stating that it was getting too exaggerated. He believed that "pledging tokens/stocks for liquidity" is a normal practice as it does not create selling pressure in the market and can also provide tax benefits. He emphasized the benefits of "tax savings," especially in the U.S. where capital gains tax is high, suggesting that pledging stocks for loans might be more advantageous than selling to avoid heavy taxation. Note: Alameda Research is based in Hong Kong, registered in the British Virgin Islands, and has also been registered in the United States.

Using Alameda as an example, he argued that "Alameda's choice to pledge FTT for loans instead of selling FTT for profit is a very reasonable operation."

Addressing Concerns: Will FTT's Decline Lead to Liquidation?

Benson pointed out that due to the high concentration of FTT chips, there may not be any entity in the market that would allow FTT to fall below Alameda's liquidation price. This is different from the situation where 3AC of Three Arrows Capital uses GBTC and ETH as collateral for loans and leverages long positions; large-cap coins have more market variables, leading to liquidation.

Addressing Concerns: Why Can FTT Secure So Much Loan?

Benson explained that lending is a mutual agreement. He stated, "Lenders are willing to accept FTT as collateral because FTX is a global giant with visible profitability and good repayment capabilities." Lenders also consider token chip conditions and liquidation risks before agreeing to lend, proving the market value of FTT.

Editor Wu Calls for Positive Response to Questions: Is FTX the Lender?

Renowned media figure and blockchain founder/editor Colin Wu responded to Benson's statement, questioning, "Will the lenders willing to accept FTT as collateral be FTX themselves?" Benson only dismissed this claim as a rumor without any basis.

Colin Wu suggested that since FTX has consistently emphasized independence from Alameda, answering three questions would clarify the situation:

• How much of the debt is borrowed from FTX, and how much is credit?
• How much of the $2.16 billion "FTT collateral" is lent out by FTX?
• Is the money lent by FTX to Alameda from its own funds?

Colin Wu also compared the transparency of how Binance and FTX have handled recent negative events, citing Binance's prompt response to the Reuters report on its Iran incident, while FTX has not yet provided a relevant response.

Shift in Negative Sentiment

Both Binance and FTX have had their fair share of negative news in the past. For example, Binance faced regulatory scrutiny in multiple countries in 2021, and in 2022, Bloomberg likened it to a Ponzi scheme. During these times, FTX was flourishing, signing sponsorship deals with celebrities and brands, and its CEO SBF participated in U.S. congressional hearings to discuss the possibility of providing derivative clearing mechanisms. However, with the market downturn, SBF aggressively acquired bankrupt crypto companies, seen as a savior.

Recently, FTX founder SBF has faced challenges, with his plans for traditional financial clearing not going smoothly, the acquisition of Voyager under investigation by Texas regulators, and facing backlash from parts of the community for proposing regulatory ideas. Moreover, the recent Twitter incident involving Alameda has not garnered as much attention as Binance's issues.

It can be said that every star has its moments of downturn; in the future, facing various types of scrutiny, cryptocurrency operators will need to have better response mechanisms.