FTX token plummets as market fears possible alameda contagion

FTT has declined nearly 20% over the course of an hour, with Solana's SOL down 17% and Serum's SRM off 10%.

Fears over another 'Three Arrows' event, but this time tied to FTX and its hybrid investment fund/market maker Alameda Research, gripped the markets Tuesday morning Asia time, sending FTX's exchange token FTT down nearly 20%.

Data from CoinGlass shows that there continues to be building short interest in FTT as open interest has surged 8% during the last hour to a total of $215 million.

The trouble for Sam Bankman-Fried's FTX started after CoinDesk reported last week that a notable portion of Alameda's balance sheet was made up of FTT and Solana's SOL token.

Since then, the market has grown concerned about FTX's liquidity. The exchange has faced a massive stablecoin exodus, with $451 million being sent off its main platform during the last week, and $15 million being pulled from its U.S. subsidiary, according to Nansen data. Currently, FTX has a balance of $59.2 million USDC and $28.5 million USDT, along with $8.6 million BUSD. FTX US has $41 million USDC, $12.8 million USDT, $39 million PAX, and $11.3 million BUSD available.

Interest rates on FTX's margin lending platform have jumped, with the exchange now paying 10% for USDT compared to a previous lending rate of 5%.

Meanwhile, Binance has seen an inflow of $411 million in stablecoins over the last week, with a current balance of $26.7 billion.

While users have reported some delays on fiat currency withdrawals, FTX says that it is working through the backlog and they are still being processed. FTX CEO Sam Bankman-Fried took to Twitter early Monday to say that the exchange was far from involvement and there is no risk of withdrawals being halted.

Binance CEO Changpeng Zhao has previously said that he plans to liquidate any remaining FTT on Binance's books, but on chain data suggests that this hasn't yet begun.

FTT is currently trading down 19% at $17.93. SOL is lower by 17% and Serum's SRM token is down 10%. The action is spilling over into bitcoin (BTC) as well, which is down 5.6% to $19,650.