Binance CEO Declined $40 Million Offer for Futures Crypto Exchange
In March 2019, Binance CEO Changpeng “CZ” Zhao turned down a $40 million proposal from former FTX CEO Sam Bankman-Fried (SBF) for a futures crypto exchange, according to an excerpt from Michael Lewis’ book.
A Zero-Risk Futures Exchange
SBF suggested creating a futures exchange with “zero risk” in case of bad trades with high leverage. Typically, futures exchanges require traders to increase collateral if the trade goes south. However, FTX aimed to develop an exchange that would monitor trader activity and automatically liquidate positions once collateral was surpassed, thereby limiting potential losses for the exchange.
Different Goals
The book reveals that Binance and FTX had divergent goals at the time. FTX wanted to cater to institutional investors, while Binance focused on retail customers. After considering SBF’s proposal, CZ decided to reject the funding request and instead launched an in-house futures platform.
Tensions Rise
CZ’s decision reportedly didn’t sit well with SBF, who referred to him as a “douche.” Following Binance’s denial, FTX went on to create its own FTX futures exchange in 2019, although there were doubts about its success.
“If it works it is worth billions of dollars, but I thought there was a better than fifty per cent chance it wouldn’t work. I’d never done marketing. I’d never talked to the media. I’d never had customers. It was just different from anything that I’d ever done.” – Sam Bankman-Fried
Another Missed Opportunity
In 2022, when FTX faced a liquidity crisis, SBF approached Binance once again for a potential acquisition. However, CZ declined, stating that the platform was beyond redemption.
Hot Take: Binance CEO Rejects $40 Million Offer for Futures Crypto Exchange
Binance CEO Changpeng “CZ” Zhao turned down a $40 million proposal from former FTX CEO Sam Bankman-Fried (SBF) to create a zero-risk futures exchange. This decision led to the development of FTX’s own futures exchange. The book excerpt also highlights the different goals of Binance and FTX at the time. CZ’s rejection strained relations between the two CEOs, leading to further missed opportunities for collaboration. Despite these setbacks, both Binance and FTX have become prominent players in the cryptocurrency industry.
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