“I Knew I Was Desperate”

Binance CEO Changpeng “CZ” Zhao knew that Sam Bankman-Fried was in dire straits when the former CEO of now-bankrupt FTX exchange called him for ransom.

CZ spoke about the events that were about to take Binance to bailout to its long-suffering industry competitor when the credit crunch sent FTX into an inescapable spiral. In its intervention At the Milken Institute’s fourth annual Middle East and Africa Summit, CZ reflected on the fateful call with SBF when the latter was looking to save his struggling exchange:

“When he came to me, I knew he was desperate. If we can’t help you, there probably isn’t anyone else who can. Probably a bunch of people missed the deal before we did.”

CZ admitted that he had intended to explore a lifeline for FTX in the interest of affected users, but due diligence conducted after signing a letter of intent quickly revealed bigger problems than Binance had imagined. The deal will subsequently discarded.

A couple of days later, FTX filed for Chapter 11 bankruptcywhich caused a huge shock in cryptocurrencies and in the financial ecosystem in general.

Much has been made of Zhao’s relationship with Bankman-Fried in the industry, with rumors of a nemesis-type relationship in recent months. Allegations that SBF was lobbying CZ and his exchange with influential figures in Washington DC were touched upon in the wide-ranging conversation in Abu Dhabi on November 16.

According to the Binance CEO, SBF had initially been a Binance client through Alameda Research and had sought to partner with CZ’s company to start a cryptocurrency exchange of its own.

CZ described SBF as a “young, technically capable kind of guy” with a “decent team,” prompting Binance to invest in fledgling exchange FTX, which was founded in May 2019.. The investment paid off up to a point:

“Their number of users grew, but then once they had grown to a certain size, I just heard all kinds of rumors, all kinds of people telling me that this guy is lobbying behind you in DC, this guy is saying bad things. behind you and we were like this is not so good.”

Binance exited its investment in FTX a year and a half ago, which turned out to be a fateful incident. According to CZ, part of the exit involved Binance’s acquisition of FTX Tokens (FTT), the same tokens that the exchange had announced that would start selling on the open market following rumors of problems with the finances of FTX and Alameda.

“When he approached me, I thought he was going to apply for an OTC (over-the-counter) deal to buy the FTT tokens and in this way we would silence the noise in the market. But when he called me, she quickly alluded that they are in big trouble and looking for a purchase.

CZ also referred to a tweet from the ex-CEO of FTX that was believed to be directed at the founder of Binance. Labeling CZ a “fighting partner,” SBF apparently congratulated the Binance CEO for outdoing it during the events that transpired:

20) At some point I might have more to say about a particular sparring partner, so to speak.

But you know, the glass houses. So for now, all I’ll say is:

well played; Won.

CZ reacted by saying that “only a psychopath can write that tweet” and that it never saw other exchanges as direct competitors due to the early stage of the cryptocurrency market and its miniscule share of the general financial markets:

“Number one, he never told me that I was his sparring partner. In fact, I’m not sure if that tweet was directed at me or us (Binance). We never see other exchanges as sparring partners or competition, it’s not a boxing match.”

As more revelations continue to emerge about FTX’s monumental collapse, its misappropriation of user funds, and dodgy businesses, CZ alleged that Bankman-Fried had continued to look for ways to withdraw funds through various blockchain pathways.

“That day he tweeted that, he should have been working on other things. I shouldn’t be tweeting. In one of the messages I sent him in an industry group, I said ‘honest advice Sam, stop whatever you’re doing, don’t do anything else, put on a suit and go back to DC and start answering questions’ ”.

The Binance founder also answered questions about his influential tweet evidencing Binance’s intention to sell its FTT tokens, which coincided with an insurmountable amount of withdrawal requests on the FTX platform.

Settling our FTTs is just post-exit risk management, learning from LUNA. We gave support before, but we will not pretend to make love after the divorce. We are not against anyone. But we will not support people who lobby other industry players behind their backs. Ahead.

Several blockchain analytics firms and individuals in the industry pointed to the move which sparked a debate throughout the cryptocurrency ecosystem.. CZ maintained that Binance had been transparent in its actions and had not manipulated the markets:

“Then our team asked me if we should say ‘look, that’s our transaction’ and I said yes, ‘why not’, we want to be transparent. How could you manipulate the market if you are transparent with your actions? We don’t lie, we don’t cheat.”

As FTX enters bankruptcy proceedings, its new CEO and head of restructuring, John Ray III, has taken steps to distance to the Bankman-Fried company. This comes after the former CEO continued to make public comments on Twitter and on interviews about the evolution of the situation.

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“I Knew I Was Desperate” – Binance CEO Opens Up About His Relationship With SBF