The story of “unlove” that cost the crypto world $100 billion

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Reuters journalists conducted an investigation, trying to find out what connects CEO Binance and FTX. Were Changpeng Zhao's goals noble after all? And why did Bankman-Fried think Binance was after his exchange?
The relationship between CZ and Bankman-Fried began in 2019, when, six months after the launch of FTX, Zhao bought out 20% of the exchange for $100 million. A person who was directly aware of the deal told reporters anonymously. At that time Bankman needed working capital and additional funding for marketing tasks, so he agreed to CZ's offer.

At the same time Binance stated that the investment was “aimed at the joint development of the crypto economy,” and the transaction sum was not disclosed. Zhao and Bankman-Fried planned joint projects to launch new tokens and support promising startups together.

But after a year and a half, their relationship deteriorated. CZ's attitude towards his partner has deteriorated, to be precise.

Gibraltar license

According to former Binance employees, FTX was rapidly growing and gaining popularity, and Zhao already saw it as a potential competitor with global aspirations.

When Sam applied for a license in Gibraltar for one of the subsidiaries in May 2021, he had to provide information about the exchange’s main shareholders. Binance ignored requests from FTX to hand over their financial documents in order to obtain registration. This is clearly seen in the email exchange accessed by Reuters.

Between May and July 2021, FTX lawyers sent at least 20 requests for information about Zhao's income sources, his bank accounts, and Binance's financial statements.

In June 2021, one of FTX's lawyers bluntly pointed out to the Binance CFO that the exchange "is not interacting with us properly" and is "derailing a project that is important to us." Binance's lawyer responded that he tried several times to get this information from Zhao's personal assistant, but was declined.

By July of that year, Sam grew tired of waiting. Tired of being on a crypto mogul’s short leash. In order to obtain the Gibraltar license, he bought out Zhao's stake in FTX for about $2 billion. Information about this is public and is known to regulators. Two months later, when Binance had already ceased being a shareholder, the Gibraltar regulator issued Bankman-Fried a work permit.

The $2 billion was partly paid out in dollars and partly in FTT tokens.

Alameda, Voyager and Robinhood

In the summer of 2022, the trading company Alameda Research made several losing trades.

According to Bankman's employees, they issued a $500 million loan to Voyager Digital at the end of May. In July, Voyager filed for bankruptcy, with a Voyager spokesman insisting that the company only used the Alameda credit line for $75 million. Reuters then unsuccessfully tried to determine the full extent of Bankman's losses. Therefore, the fate of the remaining $425 million will most likely be determined by a federal court.

In addition, there were two more loans to crypto companies, the names of which have not yet been disclosed, but some facts indicate that the loans were issued to support subsidiaries of Robinhood Markets Inc. It is important to note that at the same time, the US division of FTX bought out for $1.4 billion its collateral assets on auction. And then it helped Alameda to cover the losses from unsuccessful transactions by providing a $10 billion loan. Most likely, the exchange's client deposits were used for this purpose.

At the time of Voyager's bankruptcy, Alameda's capital was almost $15 billion. It was backed by digital assets, including FTT, and the Robinhood trading platform shares (7.6%).

According to anonymous sources, some of the assets were user deposits, but Reuters journalists could not establish their value at the time. As it is now becoming clear, customer funds accounted for more than half of the company's capital.

The beginning of the FTX collapse

On November 2, news agency CoinDesk published an article about an insider leak of Bankman's balance sheet data. It allegedly demonstrates that the majority of Alameda's $14.6 billion in assets are FTT tokens.

Alameda’s CEO Caroline Ellison tweeted that the balance sheet was for internal use only by "our specific entities" and does not reflect additional assets of more than $10 billion. Ellison did not respond to questions from readers to clarify.

Her silence only fueled the growing rumors that Alameda's financial well-being directly depends on the price of the FTX exchange token.

And in this tense moment, CZ appeared on the scene. He stated that Binance will sell its entire $580 million stake in FTT, which it received from Bankman in July 2022, “due to recent revelations that have come to light,” alluding to the CoinDesk article. The price of the token collapsed by 80% within a day and a panic outflow of assets from the FTX exchange began. In 72 hours, the number of withdrawn funds amounted to about $6 billion, despite the fact that daily withdrawals usually did not exceed $20 million.


Everybody knows what happened next.

And Sam's sad tweets, "Sorry. I screwed up."

And his attempts to turn a CZ-competitor into a CZ-knight rescuing a drowning colleague.

And his emotional swings from “We are in this together” to “Obviously Binance is trying to undermine us. May it be so."

And his complaints that the FTX’s archrival is planning a shock takeover.

Probably, this often happens to people who, at the age of 30, are building a business empire worth $32 billion, but do not understand the psychology of people and business at all.

What about Changpeng Zhao? He once again confirmed the wisdom of the Chinese philosopher Sun Tzu about revenge: “If you wait by the river long enough, the bodies of your enemies will float by.”

The "offender’s" corpse floated by. But right after came a hit from the regulators which CZ definitely did not expect. And all is due to envying someone else's success.