In a Twitter thread, Binance's CZ took aim at the narrative that he killed the rival FTX exchange by announcing plans to dump its FTT exchange token.
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Binance CEO Changpeng "CZ" Zhao set out to dispel a couple of narratives about the destruction of rival cryptocurrency exchange FTX, most notably the one that says he deliberately killed it.
After a quick swipe at the idea that he "wants to be the savior of crypto" — Zhao said "it doesn't need saving" — he got into the meat of it.
The second of his five false narratives, that FTX was killed by a third party, led him to say:
"No, FTX killed themselves (and their users) because they stole billions of dollars of user funds. Period."
The third was that Bankman-Fried had good intentions.
Then he addressed "CZ's tweet destroyed FTX" by saying that first of all, "no healthy business can be destroyed by a tweet."
The Sabotage Narrative
It's a narrative that began on its own, after a short Twitter thread Zhao launched at 10:47 a.m. ET on Nov. 6.
In it, he said that due to "revelations" in a CoinDesk story that FTX's sister company, trading firm Alameda Research, had a $5.8 billion pile of the FTX-issued exchange token FTT on its books, Binance would liquidate its own store of FTT over the next few months.
At more than one-third of its $14.6 billion assets, the story revealed just how shockingly intertwined the finances of Bankman-Fried's exchange and supposedly independent trading firm really were.
It was the first hint of what was allegedly a massive fraud perpetrated by Bankman-Fried and his associates, who appear to have "loaned" some $10 billion of FTX customers' funds to Alameda, which lost them on the market.
Binance reportedly still had more than $500 million in FTT when it was bought out of its investment in Sam Bankman-Fried's exchange. While Zhao said it would move slowly so as not to impact the price of an asset with limited liquidity, traders started selling, FTT started falling and customers began withdrawing billions from FTX. Five days later, FTT had cratered and the world's second-largest cryptocurrency exchange was in bankruptcy.
It's hard not to see a connection between the two events, particularly given Zhao's immense influence in the crypto community.
That's a narrative Bankman-Fried tried none-too-subtly to perpetuate with a tweet at the end of a long thread that would be first of many self-serving mea culpas. It read:
"At some point I might have more to say about a particular sparring partner, so to speak. But you know, glass houses. So for now, all I'll say is: well played; you won."
Which certainly suggests that FTX was killed by an attack from a rival rather than the situation that led what John Ray III, the Enron-bankruptcy veteran who took over as CEO of FTX Group's 130-odd companies after the Chapter 11 filing, to say he'd never seen "such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here."
As for Zhao, he added that Bankman-Fried "perpetuated a narrative painting me and other people as the 'bad guys.'" He said:
"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."
Point of No Return
While it may or may not be possible for a healthy business to be destroyed by one tweet, there's more than a little evidence that unhealthy FTX was taken down by one.
But, as a Bloomberg story Zhao linked to noted, it wasn't his tweet.
That story, "FTX's Point of No Return Can Be Traced Back to This Tweet, Data Show," referred to Alameda Research CEO Caroline Ellison's response to Zhao's tweet about selling off Binance's FTT. Made at 11:03 a.m. ET, it said:
"@cz_binance if you're looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22!"
Which was, as Bloomberg noted, a below-market price. "That's when market liquidity evaporated in an asset FTX had valued at around $5 billion a week earlier," it said.
After that, there were four FTT sell orders for every buy order.