According to SBF, Binance CEO CZ caused the bank run & never intended to acquire FTX

What Went Wrong

1. Alameda Research became insolvent when the economic environment changed (see here)

2. Failures of FTX’s internal controls (see here)

   
   

3. Binance’s role in FTX’ collapse.

   1. I won’t belabor this point, because at the end of the day I fucked up. I will note, briefly, the following:

   2. Alameda’s assets fell precipitously in value beginning on Nov. 6th 2022, hours after Binance’s CEO (CZ) tweeted his intent to sell his holdings in FTT

   3. The ‘run on the bank’ was triggered by the same tweet by Binance’s CEO.

   4. That tweet followed what I believe to be a month of sustained negative PR on FTX largely being driven by Binance.

   5. Alameda’s hedges failed in November 2022 because the crash was specific to its hedges, triggered by the same PR campaign by CZ.

   6. Around November 8th, we agreed with CZ on a deal that would have Binance acquire FTX at a small fraction of its value a week earlier.

      1. We signed an LOI that prevented us from talking to other potential investors as long as the negotiations with Binance were ongoing.
      2. During that time, I received serious expressions of interest from multiple potential investors who represented billions in capital that could have gone to customers. I was inhibited in responding by the LOI.
      3. A day later, Binance announced they were not going to go through with the deal. We learned about them backing out from their Twitter post.
      4. As best I can tell, Binance never intended to go through with the deal.

   7. Roughly ~$3b of capital was used buying Binance’s stake in FTX, because Binance’s equity ownership was causing KYC issues for FTX: Binance was not cooperative in supplying information about CZ to regulatory bodies FTX was applying for licensure with.

   8. A few months ago, FTX was generally considered to be Binance’s most significant competitor globally. After the crash, Binance has averaged roughly 70% of global cryptocurrency volume, up from roughly 50% before.

      1. There are reports that, due to its increase in market share following FTX’s collapse, Binance might be able to avoid regulatory enforcement:

         https://www.reuters.com/article/fintech-crypto-binance-doj-idCAKBN2SW0ZY

   9. There is much more to say about Binance, its role in the cryptocurrency ecosystem, and its relationship with FTX, but this is neither the place nor the time for it.