New book reveals Binance CEO CZ rejected SBF’s $40M request for futures exchange

Binance CEO Changpeng “CZ” Zhao reportedly declined to pay $40 million to former FTX CEO Sam “SBF” Bankman-Fried for a futures crypto exchange in March 2019, in response to an excerpt from Michael Lewis’ book Going Infinite: The Rise and Fall of a New Tycoon.

In accordance with the book, SBF proposed a futures exchange with “zero threat” in case of unhealthy trades with excessive leverage. Historically, a futures exchange permits merchants to leverage funds in opposition to a small collateral, and the exchange usually asks merchants to extend collateral if the commerce begins to go unhealthy.

In crypto, worth swings may be quick and important, which may go away exchanges with unhealthy money owed on account of a scarcity of collateral. Nevertheless, FTX wished to create a futures exchange that may monitor the dealer’s exercise and, as quickly because the commerce surmounted the collateral, would liquidate the consumer’s positions, thus limiting any potential losses to the exchange.

The book means that on the time of SBF’s proposal in 2019, Binance and FTX had totally different objectives. FTX wished to cater to institutional buyers, whereas Binance was all about retail prospects. After pondering the proposal for just a few weeks, CZ reportedly denied the request for funding from SBF and went on to create an in-house futures platform.

The creator of the book claims that CZ’s resolution didn’t go down properly with SBF, who reportedly referred to as the Binance CEO a “douche” for his resolution. After the denial from Binance, FTX created its personal FTX futures exchange in 2019 however wasn’t positive about its success. An excerpt from the book quoting SBF reads:

“If it really works it’s value billions of {dollars}, however I believed there was a greater than fifty per cent probability it wouldn’t work. I’d by no means completed advertising. I’d by no means talked to the media. I’d by no means had prospects. It was simply totally different from something that I’d ever completed.”

This was not the one incident when SBF and CZ crossed paths. In 2022, when the FTX liquidity disaster got here to mild, FTX reached out to Binance once more for an acquisition, however CZ declined, claiming the platform was past redemption.

Associated: Latest update — Former FTX CEO Sam Bankman-Fried trial [Day 1]

The most recent revelation comes as the previous FTX CEO’s trial kicks off in New York, the place he faces a number of fees of fraud and cash laundering in connection to the collapse of FTX.

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