 |
| Changpeng Zhao |
In his memoir Freedom of Money, Changpeng Zhao (known in the community as CZ), the founder of the largest cryptocurrency exchange Binance, shed light on the behind-the-scenes events leading up to the loud collapse of the FTX exchange. A key revelation was an episode in November 2022, when former FTX head Sam Bankman-Fried turned to Zhao with a desperate request for financing in exchange for a stake in the sinking company.
At the height of the liquidity crisis engulfing FTX, Sam Bankman-Fried attempted to find salvation with his main competitor. According to the memoir, he asked Binance for several billion dollars, offering a stake in FTX in return. Changpeng Zhao notes that he had no interest in the offer. CZ described Sam Bankman-Fried's approach as "indirect and wishy-washy," stating that the request was made "nonchalantly, as if he were asking for a bologna sandwich" . Binance soon publicly refused to acquire FTX, citing massive problems in the competitor's financial reporting and management .
In his recollections, Zhao points to a specific trigger that accelerated the collapse of Sam's empire. In his opinion, the fatal mistake was a public offer by Alameda Research CEO Caroline Ellison to buy FTT tokens from Binance at a fixed price of $22 . She had essentially "revealed her floor price" to the world .
The irony of the situation was that it was the actions of Ellison and Sam Bankman-Fried that provoked panic. Professional traders immediately began shorting the token, causing its price to plummet to $15, then $10, and finally below $5 . Users began withdrawing funds from FTX en masse, quickly depleting the exchange's reserves and revealing a multi-billion dollar hole in its balance sheet. As a result, the native FTT tokens, on which a significant portion of Alameda's assets depended, were deemed worthless, and Binance completely divested from them .
Particular attention in the memoir and the press is given to a private chat on the Signal messenger, where heads of major crypto exchanges exchanged messages at the height of the collapse. The New York Times previously published fragments of this correspondence, in which Zhao accused Bankman-Fried of attempting to destabilize the stablecoin market.
Changpeng Zhao confirmed the existence of this chat-created by an FTX employee named Zane Tackett and including figures like Brian Armstrong of Coinbase-but emphasized that the communication was spontaneous and did not constitute collusion to manipulate the market. Nevertheless, according to sources, it was this correspondence that attracted close attention from American regulators (including the CFTC and SEC) during subsequent investigations .
25 Years for $8 Billion
While Changpeng Zhao is working on his memoirs, his counterpart from the 2022 crisis is in entirely different circumstances. In March 2024, the U.S. District Court for the Southern District of New York sentenced Sam Bankman-Fried to 25 years in prison. Judge Lewis Kaplan found him guilty of fraud and embezzlement of $8 billion in FTX customer funds, calling the incident one of the largest financial crimes in U.S.A. history.
Clients of the collapsed exchange lost billions of dollars, and the story itself has become a vivid illustration of how public statements on social media and a lack of transparency can destroy a crypto empire worth tens of billions of dollars in a matter of days.