What happened 

The cryptocurrency market went into free fall overnight after Binance CEO Changpeng Zhao and FTX and Alameda Research founder Sam Bankman-Fried escalated their feud. The fallout has been widespread but there were some key moves among certain digital currencies. 

As of 7:30 a.m. ET, FTX Token has fallen 22.7% in the last 24 hours, Solana (SOL -9.61%) is down 10.2% and hit a low of $25.51, and Dogecoin (DOGE -7.90%) has dropped 13%. The one token that hasn't lost a significant amount of value is BNB (BNB -0.44%), which is off 1.8% in the past day.

So what 

Over the last week, a feud between Bankman-Fried and Zhao has erupted. The exact origins aren't clear, but the two have been publicly sparring on Twitter in recent days. A final straw for the market was when Binance said it would sell the $500 million in FTX tokens that it owns. 

Alameda's CEO offered to buy the tokens back for $22 apiece in an over-the-counter deal, but that doesn't appear to have been completed. Late Monday night, the bottom fell out of FTT's price and it appears Bankman-Fried is selling tokens like Solana to buy back FTT and Binance is selling FTT and buying BNB. We don't know exactly whether these trades are being completed by Zhao and Bankman-Fried, but the market is reacting to them even if they aren't. 

Where this gets dangerous for the crypto market broadly is the collateral positions FTX and/or Alameda might have. According to a report from CoinDesk, Alameda has $8 billion in liabilities and much of that may be backed by $5.8 billion in FTT tokens (the value CoinDesk reported before last night's drop). It's not clear the terms of the debt or what the exact collateral is and when positions might be liquidated, but investors are certainly worried. If FTT is used as collateral in a meaningful way and gets liquidated, it could fuel continued selling pressure on the token and send a shockwave across the crypto market. 

The worry about contagion or any insolvency is largely tied to Alameda Research's trading, but FTX is at least tied to the trades because of the FTT token the company owns. It's not clear if FTX has provided any loans to Alameda Research. 

Now what 

We only have to look back to the summer of 2022 to see how quickly a leveraged trading firm can cripple the crypto market. The insolvency of Three Arrows Capital eventually cost investors millions and brought down Celsius Networks and Voyager with it. 

The big move in FTT tokens is understandable today, but we don't know exactly what Bankman-Fried may be forced to sell if Alameda is indeed in trouble. Alameda had a large position in Solana, which is why that token is down today, but there could be others. 

Not only is Alameda a big player in crypto trading, but FTX is a widely used crypto exchange, so there have been a lot of traders moving off the exchange. That could make the declines even worse, which is something for everyone in crypto to watch the next few days.