Post By: CryptosHeadlines.com
SBF stated that FTX aimed to focus on crypto margin trading and hoped Binance would buy the platform.
On Friday, October 27, Sam Bankman-Fried appeared in a US court. He acknowledged his errors but denied defrauding US customers. What’s noteworthy is that he mentioned FTX was open to being acquired by the big crypto company Binance in its early days.
The FTX and Binance Story
In 2019, when Sam Bankman-Fried and co-founder Gary Wang started the now-closed exchange in Hong Kong, they had a clear plan in mind. Their goal was to focus on margin trading and offer customers the opportunity to make big bets.
According to court testimony, FTX believed that it should establish itself as a specialized platform for margin trading because there were few options in this area. Bankman-Fried even mentioned during the testimony that an exchange like Binance might be interested in buying FTX.
FTX’s initial standout feature, Bankman-Fried recalled, was its advanced risk engine. Unlike other exchanges at the time, FTX’s risk engine took a more comprehensive look at customers’ accounts to determine when their positions might face liquidation.
Bankman-Fried also pointed out that cross-margin trading was a key factor in FTX’s early success. Essentially, this feature allowed traders to use extra margin from one trade to meet margin requirements for other trades.
Binance Withdraws from FTX Agreement
Binance showed interest in buying FTX when the exchange faced difficulties in November last year. However, Binance eventually decided not to go through with the acquisition. CEO Changpeng Zhao stated, “The issues with FTX were beyond our ability to help.”
Instead of acquiring FTX, Binance focused on improving its own platform with the help of an internal Binance team, as mentioned by Bankman-Fried during the trial.
When asked about FTT, FTX’s unsuccessful token, by lead lawyer Mark Cohen, Bankman-Fried mentioned that Binance’s BNB token had inspired FTT. He also revealed that Binance was FTX’s first investor, providing the exchange with $80 million worth of BNB as initial funding.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.