What really happened between Binance and FTX? CZ finally tells his side

The relationship between Binance and FTX has long been one of the most controversial rivalries in the cryptocurrency world. Now, Changping Zhao (CZ) offers one of his most detailed public accounts to date.

CZ describes how cooperation turned into competition before FTX collapsed in 2022.

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CZ reveals secret split between Binance and FTX

Speaking on the All-In podcast, Trace The former CEO of Binance The relationship dates back to early 2019, when he first met Sam Bankman-Fried (SBF), who ran Alameda Research.

“I think I met him for the first time in January 2019 at one of the Singapore conferences organized by Binance. I think FTX did not exist at that time … Sam … ran Alameda,” he said. He said CZ, recalling that Alameda was then a major client for trading on Binance and relations were friendly at first.

According to CZ, Alameda and the FTX Future team soon approached Binance with proposals to cooperate on a derivatives platform. Various offers have been made over time, including a joint venture structure that would have favored Binance.

Finally, at the end of 2019, Binance agreed to invest.

“Yes…we only invested in it 20% as equity at one point, and then we got out a year later…we weren’t there long,” said CZ.

The agreement included an exchange of tokens BNB and FTTBinance has become a minority shareholder. CZ confirmed the following:

• He remains a passive investor throughout the relationship
• They chose not to ask for financial statements because the two companies operated businesses of future competitors.

“Because of the competitive nature of the business … I don’t really … ask for financial statements … I’m a very passive investor. So when I invest, I don’t participate in their business,” he said.

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Binance-FTX tensions under the surface

Despite early cooperation, CZ said relations deteriorated rapidly. He is said to have started hearing reports that SBF is criticizing Binance in political and regulatory circles in Washington.

“And after we made that deal, I kept hearing from my friends … CZ said that SBF was talking bad about us in Washington circles.

He also described frustration with hiring practices, claiming that FTX underpaid Binance employees by offering significantly higher wages. FTX will use these appointments to approach Binance VIP customers with competitive offers.

While CZ said he tried to maintain a collaborative tone publicly and even agreed to joint appearances at industry events, he noted that the rivalry was actually escalating behind the scenes.

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Why did Binance exit?

At the beginning of 2021, FTX raised capital at a valuation of $32 billion. CZ said that Binance has contractual veto rights over future funding rounds, but chose not to exercise it.

“So… we said… why don’t we actually go out?” CZ claims that Binance would rather compete freely than be a shareholder in a fast-growing competitor.

The exit was completed in July 2021, about a year and a half ago From the collapse of FTX in November 2022.

“This is almost before they run into problems … At the time we did not know,” he said, dismissing claims that Binance exit due to insider knowledge. “This is completely false.”

FTX collapses and out

FTX eventually went bankrupt after revelations of misappropriation of customer funds To cover losses at Alameda Research Corporationwhich led to a liquidity crisis and bankruptcy.

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Binance’s decision in November 2022 to divest its stake in FTT accelerated the banking blitz. However, subsequent investigations and court proceedings concluded that the main cause of the collapse was internal fraud and mismanagement.

CZ declined to comment further on ongoing legal disputes, including efforts by FTX’s bankruptcy estate to recover funds from the 2021 exit. However, it reiterated that Binance had no insight into FTX’s internal finances while it was a shareholder.

Taken together, the CZ account represents the Binance and FTX relationship not as a sudden collapse, but as a gradual collapse. If their statements are any indication, the relationship was characterized by early cooperation, growing rivalry and strategic exit before the crisis that reshaped the cryptocurrency industry.

SBF did not immediately respond to BeInCrypto’s request for comment on CZ’s allegations.