The chief executive of the world’s largest crypto exchange is sounding off against Sam Bankman-Fried, claiming that the disgraced FTX founder is a “fraudster.”
In a lengthy thread, Changpeng Zhao says that Binance pulled out of its investments in FTX over a year and a half ago as something seemed off about the crypto exchange’s former CEO and its sister firm Alameda Research.
“As an early investor in FTX, we became increasingly uncomfortable with Alameda and [Bankman-Fried] and initiated the exit process more than 1.5 years ago.
Sam was so unhinged when we decided to pull out as an investor that he launched a series of offensive tirades at multiple Binance team members, including threatening to go to ‘extraordinary lengths to make us pay’ – we still have those text messages.”
According to Zhao, it was apparent that something was wrong with FTX when he noticed Bankman-Fried’s firm was lavishly spending money, even outspending Binance, a company much larger than the bankrupt crypto exchange.
“You don’t have to be a genius to know something [didn’t] smell right at FTX. They were 1/10th our size, yet outspent us 100/1 on marketing and ‘partnerships,’ fancy parties in the Bahamas, trips across the globe and mansions for all of their senior staff (and his parents).”
Zhao also questions prominent venture capitalist and former FTX spokesperson Kevin O’Leary, asking him how he could continue to defend a “fraudster” like Bankman-Fried.
“It seems $15 million not only changed Kevin O’Leary’s mind about crypto, it also made him align with a fraudster. Is he seriously defending Bankman-Fried?”
Bankman-Fried caught wind of Zhao’s comments and countered, saying that Binance had no right to pull out of its FTX investments.
“You won, [Zhao].
There’s no need to lie. Now, about the buyout. We initiated conversations around buying you out, and we decided to do it because it was important for our business. And while I was frustrated with your ‘negotiation’ tactics, I chose to still do it.
You threatened to walk at the last minute if we didn’t kick in an extra ~$75 million. We did it anyway because this just made us feel more confident we didn’t want Binance on our cap table. But again, none of this is necessary. You won. Why are you lying about this now?
Among other things, as you know, you didn’t even have the rights to pull out as an investor unless we chose to buy you out – much of the tokens/equity was still locked.”
Zhao retorted, saying that in the end, “no one won.”
“Sam, not that it matters now. You also can’t force us to sell if we don’t want to. Also, we have the veto right to block any further fundraising you were doing. Never used or mentioned it. It was never a competition or fight.”
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