The High-Stakes Rivalry: How CZ's Strategically Orchestrated Move Led to FTX's Downfall

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The High-Stakes Rivalry: How CZ's Strategically Orchestrated Move Led to FTX's Downfall

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In November 2022, FTX, Sam Bankman-Fried's cryptocurrency company, faced imminent collapse. The final blow came from Changpeng Zhao, known as CZ, the CEO of Binance, when he announced on Twitter that Binance was selling off its entire stake in FTX's house token, FTT. This fire sale, combined with Bankman-Fried's unsuccessful attempt to defend the token, sparked panic and ultimately led to FTX's bankruptcy a few days later.

This narrative might sound familiar to those who have been following the tumultuous events in the crypto industry over the past year. However, in Michael Lewis's new book "Going Infinite," new insights into the bitter rivalry between these two crypto heavyweights are unveiled. The book reveals how Zhao had set a trap for Bankman-Fried more than a year prior, strategically positioning himself to deliver the final blow in the fall of 2022.

Before diving into the trap, it's worth noting some intriguing details Lewis discovered about the relationship between these two men. It was revealed that Bankman-Fried paid Binance $150,000 in an attempt to bring legitimacy to FTX during a conference in Singapore back in 2019. Lewis phrases it as Bankman-Fried effectively paying CZ to be his friend. Later, Zhao acquired 20% of FTX for $80 million but only after initially rejecting Bankman-Fried's offer, causing the FTX founder to complain about him, calling him "kind of a douche." During another argument, Bankman-Fried even went as far as saying that Zhao was exhibiting typically "Chinese" behavior, referencing his Canadian-Chinese background.

The most intriguing aspect of their deal, however, is the currency of payment demanded by Zhao. In addition to cash and Bitcoin, Zhao required $500 million worth of FTT tokens and crucially, $400 million worth of FTX's native token, BNB, as payment. This token was the very currency that Zhao had used to buy his stake in FTX. In this transaction, Zhao acquired a large amount of FTT, which he would later use to sink FTX, while simultaneously ensuring that his rival had to hand over BNB, which Bankman-Fried could have used to retaliate against Binance.

When approached for comment on Lewis's findings, Binance declined, leaving room for speculation about the strategic motives behind Zhao's inclusion of FTT and BNB in the buyout transaction. However, it is widely believed that Bankman-Fried underestimated Zhao's strategic prowess, leading to his downfall.

In summary, this article sheds light on the intense rivalry between Sam Bankman-Fried and Changpeng Zhao, revealing how a carefully planned move by Zhao ultimately led to the downfall of FTX.