Binance CEO Changpeng Zhao reportedly refused to pay former FTX CEO Sam Bankman Fried $40 million for futures on the cryptocurrency exchange in March 2019, according to an excerpt from Michael Lewis’ book Going Infinite.
The book states that the SBF proposes to establish a “zero-risk” futures exchange to facilitate exchanges in the event of bad trading due to high leverage. Traditionally, futures exchanges have allowed traders to leverage funds with a small amount of collateral, and exchanges often require traders to increase their collateral in case a trade starts to go bad.
However, in cryptocurrencies, price fluctuations can be rapid and significant, which can cause exchanges to incur bad debts due to a lack of collateral. However, FTX wants to create a futures exchange that monitors trader activity and liquidates users’ positions once trades exceed collateral, thereby limiting any potential losses to the exchange.
The book shows that Binance and FTX had different goals when Sam made his proposal in 2019. FTX hopes to cater to institutional investors, while Binance focuses on retail customers. After a few weeks of thinking about it. CZ reportedly rejected Sam’s request for funding and went ahead to create an in-house futures platform.
The author of the book claims that CZ’s decision was not popular with the SBF, who reportedly called the Binance CEO a “bastard.” After Binance’s denial, FTX created its own FTX futures exchange in 2019, but its success is uncertain. Excerpts from the book are as follows:
“It’s worth billions of dollars if it works, but I think there’s more than a fifty percent chance it won’t work. I’ve never done marketing. I’ve never talked to the media. I’ve never had clients. This It’s different than anything I’ve done before.”
This is not the only incident where SBF and CZ have clashed over joint business decisions. In 2021, when the FTX liquidity crisis was exposed, FTX once again sought acquisition from Binance, but CZ once again refused, claiming that the platform was irreversible.
Related: Latest Update – Former FTX CEO Sam Bankman-Fried Trial (Day 1)
The latest revelations come as FTX’s former CEO faces multiple fraud and money laundering charges related to the collapse of the FTX exchange. SBF’s jury trial begins on October 3.
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