Changpeng Zhao and Sam Bankman-Fried started collaborating in 2019, following the launch of the FTX crypto exchange. Binance had decided to partner with FTX to “grow the crypto economyit seems. But, relations between the two CEOs have deteriorated in less than two years. According to a few former Binance employees, Changpeng Zhao initially saw FTX as a strong competitor. The situation was such that in May 2021, Binance did not want to cooperate with FTX so that it obtained a license in Gibraltar for a subsidiary. Now Binance is dropping Bankman-Fried. What really happened? Discover an analysis of the situation.
These events that led to the signing of a letter of intent
As the FTX-Binance case hits the headlines, Reuters publish an analysis regarding the relationship between Zhao and Bankman-Fried. It seems that FTX’s downfall was caused by Bankman-Fried who had decided to become the white knight of several crypto companies. Sam notably backed his trading firm Alameda Research, without informing other FTX executives.
The situation began to deteriorate on November 2 when CoinDesk published a survey of the trading firm. The latter revealed that Alameda’s assets are primarily based on FTX’s native token, FTT. Changpeng Zhao then said that Binance would sell its over $580 million stake in the token.
Bankman-Fried reacted to his rival’s tweet saying, “We move forward“. “Clearly Binance is trying to come after us“, he specified. But everything changed on Monday, when user withdrawals caused huge losses for FTX.
Lost, Bankman-Fried contacted Zhao to offer to become its funder. A non-binding letter of intent has been signed with Binance for the eventual purchase of multi-billion dollar FTX assets.
When Binance, the white knight turns into a black knight!
By signing the deal with Bankman-Fried, Binance and CZ have become the white knight of their rival. The latter did not fail to show them his gratitude by declaring on Twitter: “Huge thanks to CZ“.
Alameda employees and executives were all shocked, as they had no idea the situation had become so serious. However, unexpectedly, Binance pulled out of the deal this Wednesday. The exchange said: “Problems are beyond our control or ability to help“.
After Binance’s withdrawal, Zhao said on Twitter, “Sad day. I tried“. Now, Bankman-Fried is exploring all options to deal with FTX’s liquidity crunch.
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