New Book Unveils Binance CEO CZ’s Rejection of SBF’s $40M Request for Futures Exchange

In an intriguing revelation from Michael Lewis’ latest book, “Going Infinite: The Rise and Fall of a New Tycoon,” it has been disclosed that Binance CEO Changpeng “CZ” Zhao turned down a significant proposal from former FTX CEO Sam Bankman-Fried (SBF). According to the book excerpt, in March 2019, SBF approached CZ with a groundbreaking idea for a futures crypto exchange, designed to operate with “zero risk” in the face of adverse trades with high leverage.

Traditionally, futures exchanges necessitate traders to leverage funds against collateral, requiring additional collateral if the trade goes awry. In the volatile crypto market, swift price swings can lead to significant losses, posing a challenge for exchanges in managing bad debts due to insufficient collateral. FTX, however, envisioned a futures exchange that closely monitored traders’ activity. If a trade surpassed the collateral, the exchange would promptly liquidate the user’s positions, limiting potential losses.

At that time, FTX and Binance had distinct objectives: FTX aimed at institutional investors, while Binance primarily catered to retail customers. After pondering SBF’s proposal, CZ purportedly declined the funding request and opted to develop an in-house futures platform.

SBF, reportedly displeased with CZ’s decision, referred to the Binance CEO as a “douche.” Subsequently, FTX forged ahead and created its own FTX futures exchange in 2019, despite uncertainties about its success. SBF, reflecting on the venture, expressed reservations, stating, “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.”

This episode adds to the history of interactions between SBF and CZ. In 2022, amidst the FTX liquidity crisis, FTX approached Binance for an acquisition, which CZ declined, asserting that the platform was irredeemable.

This revelation surfaces as SBF’s trial unfolds in New York, where he faces multiple charges of fraud and money laundering linked to the collapse of FTX. The book sheds light on the complex dynamics and decisions that have shaped the cryptocurrency industry’s trajectory.

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