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Now that FTX's Sam Bankman-Fried (SBF) has become a favorite punching bag for crypto enthusiasts, hardly a day goes by when the former CEO of the now-bankrupt exchange is not subjected to a verbal dressing-down, and rightfully so. Now, the man who some say precipitated FTX's downfall, namely, Binance's CZ Zhao, is out with a fresh take on SBF's perfidy.
The core problem at FTX was an undisclosed symbiotic relationship with the trading arm of Sam Bankman-Fried's crypto empire, Alameda Research. FTX apparently held its client funds in a comingled bank account with Alameda Research, allowing the cryptocurrency trading firm the opportunity to skim around $10 billion directly from FTX's client deposits to place leveraged bets using illiquid collateral, mostly consisting of coins such as FTT, Serum, etc. Moreover, FTX also allowed Alameda to assume the positions of its clients that were subjected to a margin call. In a bull market, this allowed Alameda to hold underwater positions and then sell them for a profit later on. However, in the current bear market, this strategy only produced aggravating losses.
This gig ended, however, once Alameda's exposure to the FTT token became public knowledge, prompting Binance to start dumping its own FTT stash, collapsing the token's price in the process. This resulted in a bank run as clients tried to exit the Ponzi scheme-promoting exchange, eventually resulting in FTX declaring bankruptcy on the back of an $8 billion financial hole in its balance sheet.
4. “CZ’s tweet destroyed FTX”
No healthy business can be destroyed by a tweet.
However, there was a tweet that may have, Caroline’s tweet 16 minutes after mine on Nov 6. Data shows it was the real cause for people to dump FTT:https://t.co/yWFqKvbqMU
— CZ 🔶 Binance (@cz_binance) December 6, 2022
Now, CZ Zhao has come out with proverbial guns blazing, countering Sam Bankman-Fried's allegations that Binance had precipitated FTX's collapse. CZ contends that no viable business could ever be "destroyed by a tweet." However, CZ then points to the tweet by Alameda Research's then-CEO, Caroline Ellison, as having done exactly that, implying that FTX was never a viable business, to begin with.
For those who might be unaware, CZ is referring here to a tweet by Ellison in which she offered to purchase the entirety of Binance's hoard of FTT coins at $22, essentially giving away Alameda's "floor price" and inviting speculators to try to collapse the token's price below this threshold – and this is exactly what then precipitated a chain reaction.
4.2 SBF perpetuated a narrative painting me and other people as the “bad guys”. It was critical in maintaining the fantasy that he was a “hero.” SBF is one of the greatest fraudsters in history, he is also a master manipulator when it comes to media and key opinion leaders.
— CZ 🔶 Binance (@cz_binance) December 6, 2022
However, CZ reserved his most scathing attack yet for Sam Bankman-Fried, calling him "one of the greatest fraudsters in history" and a "master manipulator when it comes to media and key opinion leaders."
On a similar note, the executive chairman and co-founder of MicroStrategy, Michael Saylor, also dissed Sam Bankman-Fried in a recent interview, taking particular umbrage with the fact that SBF's entire Ponzi scheme rested on an in-house token, namely, the FTT coin.
"There is something ethically broken about being able to issue your own unregistered security. Sam and most of the people in the crypto world were always guilty of the sin of shitcoinery."
.@SBF_FTX,
Based on your role as CEO and your media interviews over the past few weeks, it’s clear to us that the information you have thus far is sufficient for testimony. (1/3) https://t.co/YUVVjOkC40
— Maxine Waters (@RepMaxineWaters) December 5, 2022
Meanwhile, we noted yesterday that Sam Bankman-Fried had refused an invitation from Maxine Waters, who sits on the US House Committee on Financial Services, to discuss the FTX saga, drawing substantial rebuke in the process. Well, the US Congress is apparently in no mood to let go of SBF that easily. In a detailed Twitter thread, Waters stated that it was "imperative" for SBF to attend the Congressional hearing on the 13th of December, keeping in view that FTX's collapse has affected "over one million people."
