By Geoffrey Smith

-- The pressure on crypto exchange FTX refused to ease up on Tuesday, as investors continued to dump its native token in response to concerns about its stability.

FTT fell as much as 30% in late trading before paring losses overnight to trade at $18.42 by 03:45 ET (08:45 GMT), down 18% on the day. It's down nearly 30% since Coindesk published information last week that suggested FTT's price had been inflated by Alameda Research, a crypto investment firm affiliated to FTX.

The slump in FTT dragged down much of the crypto space with it: and both fell over 4% to their lowest levels in over two weeks. fell over 10%, amid fears that Alameda may be forced to liquidate its large holding of that coin as it raises funds to defend FTT's price.

FTT has come under intense selling pressure since Changpeng Zhao, the CEO of FTX's biggest rival , said at the weekend that Binance will liquidate its entire holding of the token in response to Coindesk's revelations. Zhao confirmed on Sunday that Binance had executed a $584 milllion transfer out of FTT, but had said he expected the overall liquidation to take months, due to the market's inability to absorb such large-scale sales.

FTT had held around the $22 level for most of Monday after Alameda CEO Caroline Ellison had offered to buy all of Binance's FTT immediately at that level. According to Coindesk, Alameda's holdings of FTT already account for over one-third of its total assets of nearly $15 billion.

The slump below $22 overnight suggests that the pressure from investor redemptions was too great for Alameda and other market-makers in FTT to sustain that level.

"Overall, it is clear that FTT market makers are working overtime to maintain the price of FTT," analysts at Kaiko wrote in a daily research note on Monday. "Ultimately it may be in all parties' best interest to engage in an OTC transaction as suggested by Caroline Ellison to limit price impacts, especially considering Binance, FTX, and Alameda all risk large losses should FTT's price fall significantly."

The latest bout of volatility in crypto has echoes of the collapse of the Terra/Luna ecosystem earlier in the year, which pushed investment platforms Celsius and Voyager Digital as well as hedge fund Three Arrows Capital into bankruptcy. Binance's Zhao had drawn a direct parallel with that episode at the weekend, saying he was "learning" from it in cutting his FTT exposure.

Zhao also accused FTX of lobbying against the crypto industry - a veiled reference to FTX owner and CEO Sam Bankman-Fried's support for controversial elements of draft U.S. legislation that could crimp the growth of decentralized finance.

Bankman-Fried pushed back against Zhao on Monday, saying that "a competitor is going after us with false rumors."

The spat between the two big exchange owners diverted attention away from other negative news about Binance on Monday. Reuters that Binance has processed over $8 billion of transfers with Iran since the U.S. imposed sanctions on the Islamic Republic in 2018, citing data from consultancy Chainalysis.