Some FTX customers may now withdraw cash from the exchange, but only if they forfeit 80% of their portfolio value to arbitrageurs.
The failing cryptocurrency exchange claimed today that it has achieved a deal with the Tron blockchain to enable holders of TRX, BTT, JST, SUN, and HT, the key currencies of the Tron ecosystem, to withdraw their tokens at 18:30 UTC.
Late yesterday, rumours about Tron’s participation started to circulate, and the actual announcement caused the tokens’ exchange price to jump. TRX is now selling for $0.32 on FTX, $0.00000382 on BTT, $0.17 on JST, $0.029 on SUN, and $29.8 on HT, however, values are fluctuating fast. On Binance, TRX is exchanging for $0.05 and BTT for $0.00000073, while on Huobi Global, JST is exchanging for $0.023, SUN for $0.0057, and HT for $6.35. These rates are drastically different from that available outside of the exchange.
If FTX customers choose to withdraw their cash, they will be required to purchase Tron tokens from FTX at a large premium (540%, 423%, 639%, 408%, and 369%, respectively) above the price at which they can sell them on solvent exchanges. In other words, consumers may only withdraw their cash from FTX if they knowingly accept a loss between 78% and 86%.
There are no assurances that consumers will be able to withdraw their monies, even if they purchase the coins at outrageous rates.
The method creates enormous arbitrage possibilities for market-makers with access to FTX’s order books since it let them purchase “cheap” Tron tokens on solvent exchanges and sell them to FTX clients at much higher rates. Alameda Research, the quant trading firm created by FTX CEO Sam Bankman-Fried, is renowned for its expertise in arbitrage.