‘We have never been sparring partners’

“I knew he was desperate.” With this, Changpeng ‘CZ’ Zhao refers to Sam Bankman-Fried, the former CEO of the fallen FTX empire. In an interview with the Milken Institute, ‘CZ’ reflects on his relationship with SBF after a tumultuous week.

CZ opens up around SBF

Among other things, CZ addressed the call he had last week with SBF, where he asked to save his crypto company. “When he came to me, I knew he was desperate. If we couldn’t help him, there wouldn’t be anyone left. Because he probably turned to other people for us.”

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The result is known: Binance pulls the plug on the contingency plan after an extensive look into the FTX books. The reality turns out to be shocking: the company has only $900 million in liquid assets, while there is a gaping financial hole of at least $10 billion.

Since Binance also cannot offer a solution, SBF has decided to file for Chapter 11 bankruptcy, 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 DC and “bad-mouthing” Binance.

CZ describes SBF as a ‘young, technically very skilled person’ with a ‘good team’ around him. In May 2019, Binance decides to take a stake in the young FTX exchange. Previously, SBF had also traded extensively on Binance on behalf of Alameda Research, including as a market maker.

Liquidation FTX tokens

FTX.com was founded in 2019 as a trading platform where everyone can go. Users get more and more perks as they shop more. A way has also been found with the FTX token to print endless money and provide liquidity for trading.

That mechanism works as follows: FTX.com always owns the majority of tokens, while the market only gets access to a small portion of tokens. As a dealer, Alameda Research ensures that the price of FTT remains artificially high. It will rise to $80 in September 2021. Now it is worth less than $2.

CZ: ‘They grew quickly, the number of users increased quickly. But I have also heard more and more rumors in recent years that bad things have been said about us behind our backs. This didn’t do our relationship any good.”

Binance decides to sell their stake last year and receive $2.2 billion in FTX tokens and stablecoins. Last week, Binance decided to sell the then-acquired FTX tokens following an alarming message in Coindesk about the trade balance of Alameda Research, sister company of FTX.com.

‘When he called me, I thought he was aiming for an over-the-counter deal, an off-market transaction, so there would be a bit of turmoil. But the conversation had a completely different purpose, namely: he was in big trouble and looking for a buyer.

The CEO of the largest crypto exchange in the world also responds to a tweet in which SBF lashes out at a ‘sparring partner’. The outside world points to CZ as a sparring partner, but they do not recognize themselves in that.

=https://twitter.com/SBF_FTX/status/1590709195892195329″ data-service=”twitter”>

CZ says that “only a psychopath could write such a tweet” and that he does not see other crypto exchanges as competitors or sparring partners.

‘First of all, he never told me I was his sparring partner. I’m actually not sure if that tweet was directed at me or us (Binance). We never consider other exchanges as sparring partners or competition, it’s not a boxing match.’

He had already impressed upon the then 31-year-old billionaire to focus on things other than writing tweets. “Put on your suit, go back to Washington DC and start answering questions,” he advised.

=https://twitter.com/cz_binance/status/1589374530413215744″ data-service=”twitter”>

In his view, CZ has not deliberately created this turmoil in the market. He just wanted to be transparent when questions arose about a large FTT transaction on their trading platform Binance.com.

“Then our team asked me if we should say ‘look, this is our transaction’ and I said ‘yes, 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’.

Explosive revelations

The FTX saga is still in full swing. John Ray III has been appointed to FTX to clean things up and Sam Bankman-Fried has officially left the company. The bankruptcy papers reveal more and more alarming details.

Eg. SBF operated completely solo without any kind of control, and there would be a loan of DKK 1 billion. USD from Alameda Research to SBF. Alameda Research could also never be liquidated on the FTX trading platform. This confirms once again that retail customers have been traded on FTX.

=https://twitter.com/wassielawyer/status/1593239939713409024″ data-service=”twitter”>

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