The Proposal
In March 2019, Binance CEO Changpeng "CZ" Zhao turned down former FTX CEO Sam Bankman-Fried's (SBF) request for $40 million to fund a futures crypto exchange, according to a new book by Michael Lewis.
The book, titled "Going Infinite: The Rise and Fall of a New Tycoon," reveals that SBF proposed a futures exchange with "zero risk" in case of bad trades with high leverage. This meant that the exchange would monitor traders' activity and liquidate their positions if they exceeded their collateral, limiting potential losses.
Different Goals
According to the book, at the time of the proposal, FTX and Binance had different goals. FTX aimed to cater to institutional investors, while Binance focused on retail customers. After considering the proposal for a few weeks, CZ ultimately decided to create an in-house futures platform instead.
A Bitter Reaction
The book also reveals that SBF was not happy with CZ's decision and reportedly referred to him as a "douche." Despite the setback, FTX went on to create its own futures exchange, unsure of its success.
"If it works, it is worth billions of dollars, but I thought there was a better than fifty percent chance it wouldn’t work," SBF is quoted as saying in the book. "It was just different from anything that I’d ever done."
A Missed Opportunity
This was not the only instance of SBF and CZ crossing paths. In 2022, during the FTX liquidity crisis, FTX reached out to Binance again for a potential acquisition. However, CZ declined, claiming that the platform was beyond redemption.
These revelations coincide with the start of SBF's trial in New York, where he faces charges of fraud and money laundering in connection to the collapse of FTX.
