Binance Founder Shares Insights on FTX Acquisition Attempt
Changpeng Zhao, known as CZ, recounted a phone call prior to Binance’s failed acquisition of FTX in November 2022. He recalled how Sam Bankman-Fried casually requested “billions of dollars,” likening it to ordering a simple sandwich. Yet, Zhao revealed he had no real interest in taking over FTX.
In his memoir, freedom of money, released on Tuesday, Zhao stated, “I had no interest in owning FTX, nor was I that interested in helping SBF.” He felt a need to protect users and the broader industry, which led to signing a non-binding letter of intent. However, he emphasized that it was just a formality, stating, “We made it clear that we were not making any promises. Our team will simply evaluate the numbers and then make a decision.”
Discussing the FTX collapse, Zhao pinpointed a critical error made by Alameda CEO Caroline Ellison. He noted that her public offer to buy Binance’s FTT holdings at $22 per share aimed to stabilize the market, inadvertently revealing her lowest price, which triggered professional traders to short the token. As a result, FTT plummeted to levels of $15, $10, and eventually $5, with $6 billion disappearing from FTX within 72 hours.
Zhao also mentioned a signaling group named Exchange Collaboration, formed by FTX’s Zane Tackett during the earlier Terra/LUNA crisis. This group included Zhao, Bankman-Fried, and leaders from Coinbase and Kraken. However, it later faced scrutiny from the Justice Department and SEC for potential collusion. Zhao clarified that there was no wrongdoing involved.
On November 9, Binance backed out of the deal. The firm’s FTT holdings, once valued at $580 million, had become almost worthless, echoing the earlier $1.6 billion loss from LUNA.
In the fallout, Binance experienced a bank run, with $7 billion withdrawn in just one day on December 14. Reflecting on that night, Zhao mentioned having dinner with a friend, stating, “I wasn’t worried.” He assured that all user funds were secure in their reserves and noted that in the following month, users had deposited back not only the amount withdrawn but even more.
