Demise of Sam Bankman-Fried and his $32 billion cryptocurrency empire was ... trends now
The demise of Sam Bankman-Fried and his billion-dollar crypto businesses may have been triggered by a single tweet from his industry rival.
Just days before the collapse of FTX and its sister firm, Alameda Research, the head of competitor Binance, Changpeng Zhao, announced his company would divest from Bankman-Fried's businesses.
He made the announcement on Twitter and cited 'recent revelations' about the health of FTX. Those revelations were detailed in an Alameda balance sheet which was leaked days earlier and indicated the financial mess Bankman-Fried's businesses were in.
Zhao said Binance would liquidate its FTT tokens. FTT is a cryptocurrency which was issued by FTX - and the Binance decision to sell its stake caused widespread panic among users of Bankman-Fried's platform.
The Binance announcement triggered a run on the bank at FTX - but the company didn't have enough money to pay investors who wanted to withdraw their assets. Customers tried to withdraw $6 billion in 72 hours.
The demise of Sam Bankman-Fried (pictured left) and his billion-dollar crypto businesses may have been triggered by a single tweet from his industry rival, Changpeng Zhao (pictured right)
The crisis ultimately exposed FTX's fraudulent practices - and Bankman-Fried was charged with wire fraud on December 2, less than a month after Zhao's tweet.
Zhao had tweeted on November 6: '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.'
In three follow-up tweets, he said Binance would try to sell its holdings 'in a way that minimizes market impact' and the process would take 'a few months to complete'.
Within XX, the crypto markets had collapsed as investors sold their stakes in droves due to the FTX failure.
Zhao also immediately tried to dispel the theory that it was a concerted effort to hurt a rival company, adding: 'Binance always encourages collaboration between industry players. Regarding any speculation as to whether this is a move against a competitor, it is not. Our industry is in it's nascency and every time a project publicly fails it hurts every user and every platform.'
He also remarked in another tweet several weeks later that 'no healthy business can be destroyed by a tweet'. Zhao followed that up with the accusation that Bankman-Fried is 'one of the greatest fraudsters in history'.
Prosecutors have alleged Bankman-Fried knowingly stole money from customers of his FTX platform.
'This is not about complex issues of cryptocurrencies,' prosecutor Nicolas Roos told the jury on Wednesday, after several days of withering cross-examination of the fallen crypto king.
Just days before the collapse of FTX and its sister firm, Alameda Research, the head of competitor Binance, Changpeng Zhao, announced his company would divest from Bankman-Fried's businesses
He made the announcement on Twitter and cited 'recent revelations' about the health of FTX. Those revelations were detailed in an Alameda balance sheet which was leaked days earlier and indicated the financial mess Bankman-Fried's businesses were in
Joseph Bankman and Barbara Fried arrive at Manhattan Federal Court Wednesday
'It's about deception. It's about lies. It's about stealing. It's about greed,'
