“I knew he was desperate.” With this, Changpeng ‘CZ’ Zhao is referring to Sam Bankman-Fried, the former CEO of the collapsing FTX empire. In an interview with the Milken Institute, CZ reflects on his relationship with the SBF after a tumultuous week.
CZ opens around SBF
CZ addressed, among other things, the call he had last week with the SBF, in which he requested that his crypto company be saved. “When he came to me, I knew he was desperate. If we couldn’t help him, there would be no one left. Because he might have approached other people for us.”
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The result is known: Binance withdraws the contingency plan after a comprehensive look at FTX’s books. The reality turned out to be shocking: the company has only $900 million in liquid assets, while there is a huge financial gap of at least $10 billion.
With Binance unable to offer a solution either, the SBF decided to file for Chapter 11 bankruptcy proceedings, a decision he now deeply regrets, he says in an interview with Vox.com.
Much has been said and written about the relationship between Zhao and Bankman-Fried. The latter is said to have strained the relationship by lobbying in Washington, D.C. and “talking badly” about Binance.
CZ describes SBF as a “very technically proficient young man” with a “good team” around him. In May 2019, Binance decided to acquire a stake in the emerging FTX exchange. Previously, SBF also traded extensively on Binance on behalf of Alameda Research, including as a market maker.
Filter FTX icons
FTX.com was founded in 2019 as a trading platform where everyone can go. Users get more and more perks the more they trade. A method was also found using FTX tokens to print endless funds and provide liquidity for trading.
This mechanism works like this: FTX.com always owns the majority of the tokens, while the market gets only a small part of the tokens. As a trader, Alameda Research ensures that the FTT price remains artificially high. It will rise to $80 in September 2021. Now it’s worth less than $2.
CZ: The number of users has grown rapidly, and the number of users has grown rapidly. But I’ve also heard more and more rumors in recent years of bad things being said about us behind our backs. This did not benefit our relationship.”
Binance decided to sell its stake last year and acquire $2.2 billion in FTX tokens and stablecoins. Last week, Binance decided to sell its then-acquired FTX tokens, following a scary message in Coindesk about the trade balance of Alameda Research, the sister company of FTX.com.
When he called me, I thought he was aiming for an OTC deal, an OTC deal so that there wouldn’t be a slight disruption. But the conversation had a completely different purpose, namely: he was in big trouble and looking for a buyer.
The CEO of the world’s largest crypto exchange also responds to a tweet criticizing the SBF as a ‘sparring partner’. The outside world refers to Czechoslovakia as a sparring partner, but they do not recognize themselves in this matter.
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CZ says that “only a psychopath can write such a tweet” and that he does not see other cryptocurrency exchanges as competitors or competing partners.
First of all, he never told me I was his sparring partner. Not sure if this tweet was directed at me or us (Binance). We never regard other exchanges as rival or competition partners, it is not a boxing match.
It has already impressed the 31-year-old billionaire that he should focus on other things than writing tweets. “Put on your suit, go back to Washington, D.C., and start answering questions,” he advised.
= https://twitter.com/cz_binance/status/1589374530413215744 “data-service=”twitter”>
In his view, CZ did not intentionally create this market turmoil. He just wanted to be transparent when questions about a large FTT trade surfaced on their Binance.com trading platform.
“Then our team asked me if we should say ‘Look, this is our transaction’ and I said ‘Yeah, why not’, we want to be transparent. How can you manipulate the market if you are transparent about your actions. We didn’t lie, we didn’t cheat.
An explosive revelation
The FTX saga is still in full swing. John Ray III is hired at FTX to sort things out and Sam Bankman-Fried officially leaves the company. Bankruptcy papers are revealing more and more troubling details.
For example, SBF operated completely unilaterally without any control, and there will be a $1 billion loan from Alameda Research to SBF. Also, Alameda Research cannot be liquidated on the FTX trading platform. This once again confirms that retail clients have been trading on FTX.
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