In an intriguing revelation, it has come to light that Binance CEO Changpeng Zhao, commonly known as CZ, declined a substantial $40 million offer from former FTX CEO Sam Bankman-Fried (SBF) for a futures crypto exchange back in March 2019. This revelation is unveiled in Michael Lewis’s book ‘Going Infinite,’ shedding light on a pivotal moment in the cryptocurrency industry’s history.

The Proposed Futures Exchange with a Unique Twist

According to Lewis’s book, SBF presented a proposal for a futures exchange that boasted “zero risk” for Binance in the event of unfavorable trades with high leverage. In traditional futures exchanges, traders can leverage their funds against a small collateral, and these exchanges often require traders to increase collateral if a trade starts to go south.

However, the world of cryptocurrency is known for its rapid and significant price swings, which can potentially leave exchanges with substantial debts due to a lack of sufficient collateral. FTX, on the other hand, envisioned a futures exchange that closely monitored traders’ activities. As soon as a trade exceeded its collateral, the system would automatically liquidate the user’s positions, effectively limiting any potential losses for the exchange.

Divergent Goals: FTX vs. Binance

At the time of SBF’s proposal in 2019, it became evident that FTX and Binance had different aspirations. FTX had its sights set on catering to institutional investors, while Binance was primarily focused on serving retail customers. After deliberating the proposal for several weeks, CZ reportedly turned down SBF’s request for funding and instead opted to develop an in-house futures platform for Binance.

The Fallout and Name-Calling

The decision by CZ did not sit well with SBF, who, according to the book, referred to the Binance CEO as a “douche” due to his rejection of the proposal. Following Binance’s denial, FTX proceeded to forge its path by launching its own FTX futures exchange in 2019. However, there was uncertainty surrounding its potential success. An excerpt from the book reads:

“If it works, it is worth billions of dollars, but I thought there was a better than fifty per cent chance it wouldn’t work. I’d never done marketing. I’d never talked to the media. I’d never had customers. It was just different from anything that I’d ever done.”

A Repeated Pattern of Business Decisions

The clash between SBF and CZ over business decisions did not end with this episode. In 2021, when FTX faced a liquidity crisis, the company once again approached Binance for a potential acquisition. However, CZ declined the offer, asserting that the platform was beyond redemption.

The Timing of the Revelation

This revelation comes to light at a critical juncture, as SBF is currently facing a jury trial related to multiple charges of fraud and money laundering in connection to the collapse of the FTX exchange. The trial of SBF began on October 3, marking a pivotal moment in the legal proceedings.

Intrigue and Drama in the Cryptocurrency World

The story of CZ’s rejection of SBF’s $40 million offer adds another layer of intrigue and drama to the cryptocurrency world. It underscores the diverse strategies and goals of key players in the industry, with FTX’s innovative approach to risk management clashing with Binance’s retail-focused model.

The Impact on the Cryptocurrency Industry

The ripple effects of this decision are still felt within the cryptocurrency industry. FTX’s subsequent launch of its own futures exchange introduced a unique risk management system that has gained attention and adoption. While the success of FTX remains uncertain, it demonstrates the industry’s resilience and willingness to push boundaries.

In Conclusion

The revelation of CZ’s rejection of a $40 million offer from SBF for a futures crypto exchange provides a captivating glimpse into the inner workings of the cryptocurrency industry. It showcases the clash of differing visions and strategies between key players, leaving a lasting impact on the industry’s evolution. As the trial of SBF unfolds, the industry watches with bated breath, awaiting the outcome of this pivotal moment in cryptocurrency history.