Binance CEO Changpeng Zhao (CZ) reportedly turned down a $40 million proposal from ex-FTX CEO Sam Bankman-Fried (SBF) in March 2019. The offer revolved around the establishment of a futures crypto exchange.
SBF’s vision was clear as a futures exchange that minimized risk in the volatile world of crypto trading. Traditionally, futures exchanges allow traders to leverage their funds against minimal collateral. However, the crypto market is volatile because of its rapid and substantial price fluctuations.
This volatility can result in exchanges incurring bad debts due to insufficient collateral. To counteract this, FTX’s proposed model would actively monitor trader activity. Moreover, when a trade exceeded the collateral, the system would liquidate the trader’s positions; this would cap any potential losses for the exchange.
FTX Launches Futures Despite Binance Snub
However, Binance and FTX had contrasting objectives at the time since FTX aimed to serve institutional investors, and Binance focused predominantly on retail customers. After mulling over SBF’s proposal, CZ decided against funding it. Instead, Binance chose to develop its own in-house futures platform. This decision didn’t sit well with SBF, which led to him labeling CZ a “douche” for his choice.
Despite the setback, FTX launched its own futures exchange in 2019. Reflecting on the venture, SBF stated,
“If it works, it is worth billions of dollars, but I thought there was a better than 50 chance it wouldn’t work. I’d never done marketing. I’d never talked to the media. I’d never had customers. It was just different from anything that I’d ever done.”
CZ Rejects FTX’s 2022 Acquisition Bid
Additionally, 2022 saw another interaction between the two CEOs. Amidst the FTX liquidity crisis, the platform approached Binance for a potential acquisition. However, CZ declined, asserting that the platform was beyond saving. The recent revelations have gained prominence as SBF’s trial commences in New York. He faces serious allegations of fraud and money laundering related to FTX’s downfall.
Read Also: FTX Creditors Could Get Full Recovery From Anthropic’s New Funding
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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