‘He lied’: Binance CEO unleashes on Sam Bankman-Fried as FTX goes bankrupt

The long-running feud between crypto moguls Sam Bankman-Fried and Changpeng Zhao has turned even nastier.

Changpeng Zhao and Sam Bankman-Fried. Picture: Getty Images

Former chief executive of cryptocurrency exchange FTX Sam Bankman-Fried appears to be slowly writing the phrase “what happened” on Twitter, letter by letter.

The world is asking the same thing after his companies, worth $47.77 billion (US$32 billion) at their peak, spectacularly collapsed on Friday.

Hailed as a genius, the 30-year-old from California watched as his net worth plunged from $23 billion ($US16 billion) to zero on Tuesday. By Friday, his companies FTX and Alameda (along with 130 affiliated companies) had filed for bankruptcy protection. He later admitted he “f***ed up”.

Mr Bankman-Fried, known as SBF, is reportedly “under supervision” by Bahamian authorities, where FTX was based.

SBF is now being widely ridiculed and loathed on social media and his longrunning feud with Binance CEO Changpeng Zhao, known as CZ, is turning nasty.

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Changpeng Zhao and Sam Bankman-Fried. Picture: Getty Images

Something rotten at FTX

CZ and SBF had been sniping at each other on social media for months before the collapse of FTX.

There were rumours something was rotten at FTX.

In early November, an article published by CoinDesk suggested that Alameda’s balance sheet was packed full of FTX's FTT token.

Then on November 7, CZ announced Binance was dumping its FTT holdings. He cited “recent revelations that have come to light” and said it was not a “move against a competitor”.

Changpeng Zhao dumped Binance’s holdings of FTT. Picture: AFP

At first SBF claimed FTX’s finances were sound.

“FTX has enough to cover all client holdings,” he wrote in a tweet that has since been deleted.

But soon, many more investors wanted to pull their funds out of FTX. A trickle became a flood and FTX didn’t have enough money on hand, it was gripped by a liquidity crisis.

SBF swallowed his pride and called CZ. He begged his fellow crypto mogul to rescue FTX.

CZ agreed but with a proviso, due diligence would need to take place.

But the rescue deal collapsed as revelations came to light that FTX was under investigation by US regulators.

SBF had allegedly transferred at $14 billion ($US10 billion) in funds to prop up FTX’s ailing sister company Alameda Research. And about $1.5 billion to $3 billion ($US1 to 2 billion) of customer funds have vanished from the crypto exchange

The transfers were not publicly disclosed and Alameda had allegedly been using FTX customer money for trades.

SBF told Reuters he “disagreed with the characterisation” of the transfers.

“We didn’t secretly transfer,” he said via a text message. “We had confusing internal labelling and misread it.”

When asked specifically about the missing funds SBF wrote: “???”

‘Liars or fraud’

SBF announced on November 12 that his companies had filed for Chapter 11 bankruptcy protection and since then CZ has been stinging in his criticism.

Yesterday CZ announced Binance was forming an industry recovery fund to “help projects who are otherwise strong, but in a liquidity crisis”.

Asked about FTX in relation to the scheme, CZ responded, “Liars or fraud never qualify as strong projects.”

CZ doubled down during a Twitter AMA (ask me anything) event, saying: “In this case I think they were lying. FTX lied. I think Sam lied to his employees, his users, his shareholders, regulators all around the world.”

The feud stretches back months.

In late October, in an apparently flex about his access to politicians and regulators, SBF tagged CZ and wrote, “Excited to see him repping the industry in DC going forward! uh, he is still allowed to go to DC, right?”

SBF has since deleted the tweet.

Sam Bankman-Fried boasted about his access to politicians in Washington. Picture: Lam Yik/Bloomberg

And in July, CZ had written, “So, 3AC owes Voyager a few 100m, went bust. FTX/Alameda gives 3AC $100m, but didn’t save it. Alameda invests in Voyager, then takes a $377 million loan from Voyager... OK... V went bust. FTX didn’t “bail them out” or return the money? hard to follow?”

SBF had responded, “Always happy for people to take an interest in helping the industry (less so if it’s just pretending) but kinda wish some of them would bother asking their legal team how bankruptcy works first... Or, you know, reach out to ask for clarifications. I’m always happy to inform!”

CZ followed that up with a tweet yesterday, “He obviously know a lot about bankruptcy even in July.”

SBF seems to have admitted defeat, writing in a thread, “At some point I might have more to say about a particular sparring partner, so to speak. But you know, glass houses. So for now, all I’ll say is: well played; you won.”

Originally published as ‘He lied’: Binance CEO unleashes on Sam Bankman-Fried as FTX goes bankrupt