What Went Wrong With FTX and Binance Behind Closed Doors – Here's The Truth – Coinpedia Fintech News
Recent revelations in the New York fraud trial of Sam Bankman-Fried, former FTX CEO, provide insight into the dramatic fall of FTX, once a leading crypto exchange. A year ago, FTX and Binance were dominant players in the crypto space, collectively commanding 46% of spot trading market share. However, the collapse of FTX in November 2022 led to chaos in the crypto markets, and Bankman-Fried now faces fraud charges. Now, the trial is revealing what went wrong.
A Report: Did Binance Cause FTX Fallout?
A report detailing the trial, recently published by FT, sheds light on the abrupt collapse of FTX, once a cornerstone of the crypto industry. Testimony and evidence in the trial reveal that Bankman-Fried sought regulatory action against Binance in 2022, indicating a deteriorating relationship between the two industry leaders.
Private notes from Caroline Ellison, CEO of Alameda Research (Bankman-Fried’s trading firm), highlighted these concerns. She believed that if regulatory action were taken against Binance, then a substantial number of its customers might shift to FTX. However, this anticipated scenario never came to fruition. The twist came when Binance refused to publish the leaked balance sheets and said Coindesk published the news first.
From Tweet to Leak, CZ Denied all Claims
Binance’s reluctance to cooperate with regulators also contributed to the tension. In November 2022, a leaked balance sheet from Alameda Research, Bankman-Fried’s trading firm, revealed its heavy reliance on FTT, a crypto token issued by FTX. It went ahead with a Twitter message from Binance’s Changpeng Zhao, announcing the liquidation of millions in FTT. This led to FUD in the market, resulting in FTX’s financial troubles and the destruction of Bankman-Fried’s empire.
Recently CZ officially stated that FTX “lied about several things.” This allowed him to underline Binance’s integrity: “We don’t do that. I consider lying fraud. We don’t lie, even though our global structure was first misleading.” We are a licenced regulatory firm globally.
From Friend to Allies…One is Doomed, Other is Sinking Low
Despite Zhao’s denial of attacking FTX, the trial brings to light a complex relationship that once dominated the cryptocurrency market. The trial documents the strained relationship between Bankman-Fried and Zhao, from allies and investors to rivals and finally adversaries.
Initially, Zhao’s Binance saw potential collaboration with FTX, viewing Bankman-Fried as a market-savvy figure capable of handling markets beyond their scope. However, tensions arose as Bankman-Fried’s influence grew. His advocacy for crypto legislation, donations to candidates, and appearances before congressional committees led to suspicions that he prioritized FTX’s interests over the broader crypto space, including Binance.
Source: Read Full Article
