On the 7th of November 2022, Alex Valaitis, the founder of W3T, made a shocking announcement. It seems the CEOs of the two biggest crypto exchanges, Binance and FTX, are at war.
What most people don't realize is that this conflict has been brewing since 2019.
Here's the complete history of how we got to this point and why you should care
MUST READ 🧵 pic.twitter.com/RZcquLYMS8
— Alex Valaitis (@alex_valaitis) November 7, 2022
CZ and SBF’s beef started way back in 2019 when FTX entered the crypto market. Binance made a substantial investment in FTX, creating a collaborative partnership. But FTX grew faster than Binance anticipated until it was right at Binance’s heels. So Binance made a preemptive strike in 2021, divesting from FTX around $2.1 billion worth
Yet that wasn’t the only reason Binance has uneasy. SBF, the CEO of FTX is an ambitious man, and he knew the one leverage he can get, was within the grasp of the US government, going as far as donating heavily to Joe Bidden’s campaign.
With the current US and China tension, it wasn’t difficult to spin blows against Binance and CZ.
Yet his newfound relationship with government regulators didn’t sit well with members of the crypto space. He was labeled “an enemy of DeFi and crypto”. And that was the beginning of FTX’s downfall.
The third and final straw though was a report by CoinDesk. It seems the assets FTX was posturing with, was their FTT, which they printed. meaning that if the price of FTT flatlines, FTX is as good as bankrupt.
CZ didn’t let the opportunity slip by. He came on Twitter to make another shocking announcement.
Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won't pretend to make love after divorce. We are not against anyone. But we won't support people who lobby against other industry players behind their backs. Onwards.
— CZ 🔶 Binance (@cz_binance) November 6, 2022
Binance was liquidating all its FTT holdings. stating that they won’t support people who lobby against other industry players behind their backs. That single tweet about FTX’s precarious state lead to a bank run so long, FTX stopped processing orders on-chain. SBF tried to control the situation, even offering to buy the FTT at a price way higher than the market value. CZ refused.
The game was simple, crash the price of FTT, and CZ would successfully crash his rival. Fortunately, CZ and SBF made sure to make up in time to protect user funds.
1) Hey all: I have a few announcements to make.
Things have come full circle, and https://t.co/DWPOotRHcX’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for https://t.co/DWPOotRHcX (pending DD etc.).
— SBF (@SBF_FTX) November 8, 2022
As Binance and FTX fights for control, Alex Pipushev of GTON Capital, believes CeFi/CeDeFi services must remain transparent in their operations. Alameda and FTX, he notes, have no portals for tracking their reserves.
In an interview with BTC-Pulse he said:
“The recent drama happening between Sam and CZ must be explained as way how big crypto industry players are competing with each other. Who will be winner? Binance is facing an influx of deposits and new users, who scared that FTX will eventually become insolvent. The case with 3AC shows that billions in liquidity can be just over-leveraged loans with illiquid assets as a collateral. This is why so many people are scared. FTX has no open data about their balances nor Alameda shows it. Despite the fact how this situation will be resolved, there is one lesson for CeFi/CeDeFi services – transparency – is an insurance against FUD.”