Having looked under the bonnet, Binance said it could no longer push ahead with the deal. Wednesday 9 NovemberĪs rumours grew of a hole in FTX’s balance sheet, Zhao suddenly pulled the plug and tipped Bankman-Fried’s enterprise into full-blown crisis. The DD – or due diligence – was going to be the most consequential phrase in that tweet. To protect users, we signed a non-binding, intending to fully acquire FTX.com.”īankman-Fried confirmed the deal on Twitter: “Things have come full circle, and FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com (pending DD etc).” “There is a significant liquidity crunch. “This afternoon, FTX asked for our help,” tweeted Zhao. In an apparent cessation of hostilities, Zhao announced that Binance would buy FTX and rescue it. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.Īfter newsletter promotion Tuesday 8 November For more information see our Privacy Policy. Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. It exited that shareholding last year and received $2.1b in Binance’s own stablecoin (BUSD) and in FTT tokens as part of the deal. In 2019, Binance had invested as a shareholder in FTX. Its position was thought to be around 5% of the total, worth around $580m before the currency crashed. Zhao set off alarm bells among investors when he tweeted “due to recent revelations that have come to light” Binance would “liquidate” its holding of FTT tokens. Referring to the holding of a chunk of assets in FTT, it added: “It’s almost as if SBF found a way to hack the financial system, printing billions of dollars out of thin air against which he was able to borrow massive sums from unknown counterparties.” Sunday 6 November Its newsletter asked if the company was insolvent. Friday 4 Novemberįollowing the CoinDesk report, a pseudonymous crypto researcher, Dirty Bubble Media, published further claims about Alameda on Substack, the newsletter platform. This meant a fall in FTT’s value would hurt both firms, given their shared ownership. Alameda held billions of dollars worth of FTX’s own cryptocurrency, FTT, and had been using it as collateral in further loans. It turns out a renewed bout of volatility was imminent.Īs Zhao spoke, the crypto news service CoinDesk published claims about the balance sheet of Alameda Research, a crypto hedge fund owned by the FTX founder, Sam Bankman-Fried. If stock markets don’t have volatility, who will invest?” he told the Guardian. “I think volatility is always going to be there. The Binance chief executive was a headline speaker at the annual Web Summit – a gathering of the great and good of the tech world – and as usual he was defending the long-term future of digital assets. Zhao was in Lisbon last week when the fuse was lit on the FTX crisis. It will probably remain under pressure as Bankman-Fried’s woes play out. His fortune has taken a hit too, falling by $79bn this year to a still-huge $16.4bn, according to Bloomberg. After graduating from Montreal’s McGill University with a degree in computer science he worked on programming systems for the Tokyo Stock Exchange and Bloomberg, before launching Binance in 2017. Zhao, 45, was born in the coastal province of Jiangsu, north of Shanghai, and followed his academic father to Canada when he was 12. His fortune, worth about $16bn at the start of the week, has now evaporated. He made multimillion-dollar political donations, appearing on Capitol Hill in a regulatory lobbying drive, rubbing shoulders with the likes of Bill Clinton and Tony Blair at FTX conferences, and paying for his company’s name to adorn Miami Heat’s basketball arena in Florida. But their backgrounds are very different.īankman-Fried, 30, is the son of Stanford University professors and a graduate of Massachusetts Institute of Technology. As former business partners and major players in a multibillion-dollar industry, their highs, and lows, are intertwined. In a few short years, they built two of the largest digital currency exchanges: FTX and the biggest, Binance. Known by the monikers SBF and CZ, Sam Bankman-Fried and Changpeng Zhao could be seen as two sides of the same crypto coin.
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