Binance founder Changpeng Zhao (CZ) says Sam Bankman-Fried asked him for “a couple billion dollars nonchalantly, like he was ordering a bologna sandwich” during the phone call that preceded Binance’s attempt to acquire FTX in November 2022, and that he never intended to follow through.
“I had no interest in owning FTX. I also wasn’t all that interested in helping SBF,” Zhao writes in his memoirs. Money freedompublished on Tuesday. “But we may have to intervene to protect users and the industry.” He signed the non-binding letter of intent, he says, simply as a formality: “I was explicit that we were not making any commitments. Our team would simply evaluate the numbers and then decide.”
Regarding the collapse itself, Zhao is clear about where it was triggered. When Alameda CEO Caroline Ellison publicly offered to buy Binance’s FTT holdings at $22 each (an attempt to stabilize the market), Zhao says she made “a fatal mistake.”
“She had just revealed her minimum price,” he writes. Professional traders immediately shorted FTT to that level. The token fell to $15, then $10, then $5. Within 72 hours, $6 billion had left FTX.
Zhao also reveals the existence of the “Exchange Collaboration,” a Signal group created by FTX’s Zane Tackett during the Terra/LUNA collapse earlier that year, which included Zhao, Bankman-Fried, Coinbase’s Brian Armstrong, Kraken’s Jesse Powell, and others. The group subsequently attracted scrutiny from Justice Department and SEC investigators. “They were interested in finding any possible signs of collusion or market manipulation between the exchanges,” Zhao writes. “Of course in this case there was no such thing.”
On November 9, Binance had withdrawn from the deal. Binance’s FTT holdings, valued at $580 million at their peak, had become “basically worthless,” Zhao writes, echoing the company’s $1.6 billion LUNA dump six months earlier.
The fallout sparked a bank run on Binance, with $7 billion withdrawn in a single day on December 14. Zhao says he spent that night having dinner with friends. “I wasn’t worried,” he writes. “All user funds were in our reserves.” Within a month, he says, users had deposited everything again, and more.
