According to the testimony of the former head of the affiliated company Alameda Research, Caroline Allison, the founder of the collapsed cryptocurrency exchange FTX, Sam Bankman-Fried (SBF), originally planned a provocation against the largest trading platform Binance to attract regulatory attention. As a result, #ftx collapsed, and SBF's plans were realized. We will tell you how such an event could have happened and how former partners turned into enemies.

Prosecutors reveal Caroline Ellison's to-do list included "getting regulators to crack down on Binance"
Watcher.Guru

How did it all start?

The history of the relationship between the cryptocurrency exchanges began in 2019 when Binance decided to invest in FTX. In the announcement of strategic investments in the trading platform, the Binance team also mentioned the purchase of FTX Token (FTT) tokens.

For several years, both cryptocurrency exchanges collaborated, and their founders, Sam Bankman-Fried and Changpeng Zhao, mutually supported each other and ranked as the richest people in the world in the Forbes list.

Fallout

In July 2021, #binance announced the sale of its stake in FTX, valued at $2.1 billion. Part of the payment for the stake in the cryptocurrency exchange was received in the form of FTX Token.

On November 6, 2022, Zhao announced his intention to sell all his FTT tokens. He explained this decision as a "company exposure." Perhaps he was referring to an investigation where journalists discovered suspicious operations between FTX and Alameda Research and speculated about financial problems with the affiliated company of the cryptocurrency exchange.

As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books.
CZ

On November 7, Zhao provided additional comments, explaining that the sale of FTT tokens was motivated by a desire not to support people who play against other participants in the cryptocurrency industry.

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

It can be assumed that Zhao received information about Sam Bankman-Fried's attempts to attract regulators to Binance, as stated by Caroline Allison.

Regulators

When it comes to SBF's attempts to attract regulatory attention to Binance, it is worth mentioning that FTX actively financed American politicians. It is known that donations were made in the amount of at least $40 million, most of which went to representatives of the Democratic Party.

Although Binance has been under close scrutiny by regulators since 2018, the real problems for the cryptocurrency exchange started with the collapse of FTX. Many in the crypto community believe that it is not just a coincidence but a direct consequence of the confrontation between Zhao and the SBF platform.

The reason for putting pressure on Binance, as Allison said, was Bankman-Fried's desire to push out a competitor from the American market and take its share.

Recall that Binance launched its American division, Binance.US, in 2019 to bring its business in line with local regulatory requirements. After the collapse of FTX, the number of claims against Binance's American division began to increase exponentially. One of the main problems was that, despite the assurances of the exchange team, the platform was not independent. As a result, market participants began to question whether the American division could survive.

What's the outcome

Bankman-Fried and Allison are under investigation, and Binance faces numerous accusations from American regulators. Binance.US is rapidly losing trading volumes, and the company's headquarters is losing top management.

Despite all the problems, Binance continues to remain the largest cryptocurrency exchange by trading volume. The company has already experienced many crises, and its perseverance gives hope to users that the exchange will continue to fight for its existence. At the same time, strict supervision by American regulators towards Binance.US raises doubts about the survival of the American division. There are even rumors that the exchange is ready to close its US division to protect its global business.

So SBF has partially achieved its goal - is Binance's US business on the brink? But at what price and who will get the freed up market share? What do you think about this? 🤔