Binance CEO: Deal To Acquire ‘Did Not Make Sense From a Number of Fronts’

Binance CEO: Deal To Acquire ‘Did Not Make Sense From a Number of Fronts’

November 13, 2022

On Friday (11 November 2022), Binance Co-Founder and CEO Changpeng Zhao (aka “CZ”) shared his thoughts on the collapse of the FTX empire at the 4th Indonesia Fintech Summit (10-11 November 2022).

As you may remember, on 9 November 2022, Binance announced why it was not able to go ahead with the plan to fully acquire, pointing out that although it was hoping to “support FTX’s customers to provide liquidity”, the issues it discovered — as part of its due diligence process and via the various news reports about FTX — were “beyond” its “control or ability to help”:

The next day, Samuel Bankman-Fried (aka “SBF”), the Co-Founder (and at the time CEO) of troubled crypto exchange FTX, took to Twitter to talk about how he had “f*ucked up” at FTX International:

He went on to say:

FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!). But that’s different from liquidity for delivery–as you can tell from the state of withdrawals. The liquidity varies widely, from very to very little… The full story here is one I’m still fleshing out every detail of, but as a very high level, I fucked up twice. The first time, a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users’ margin. I thought it was way lower…

My sense before: Leverage: 0x USD liquidity ready to deliver: 24x average daily withdrawals Actual: Leverage: 1.7x Liquidity: 0.8x Sunday’s withdrawals Because, of course, when it rains, it pours. We saw roughly $5b of withdrawals on Sunday–the largest by a huge margin…

And so I was off twice. Which tells me a lot of things, both specifically and generally, that I was shit at. And a third time, in not communicating enough. I should have said more. I’m sorry–I was slammed with things to do and didn’t give updates to you all… And so we are where we are. Which sucks, and that’s on me. I’m sorry…

On Friday (11 November 2022), in Bali, CZ was asked about FTX (more specifically, for his thoughts on the events of the previous 72 hours relating to FTX) on day two of the two-day Indonesia Fintech Summit 2022.

CZ said:

This problem wasn’t created in the last three days… FTX is misappropriating user funds… From our perspective, the deal did not make sense from a number of fronts… So, our original intention was let’s save the users, but then the news of misappropriating user funds and especially US regulatory agencies’ investigations, we’re like, ‘okay, we can’t touch that anymore’… And then as soon as I understood we couldn’t touch it anymore, I said let’s make that announcement as quickly as possible because we don’t want to do a slow no…
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