Binance founder and CEO Changpeng Zhao has revealed previously unheard details about the dramatic downfall of FTX in November 2022 in his recently published book, “Freedom of Money.” Zhao describes his interactions with FTX founder Sam Bankman-Fried, particularly Bankman-Fried’s direct and unexpected request for a multibillion-dollar bailout—a moment that sheds light on the crisis enveloping the cryptocurrency industry at the time.
Behind the failed FTX sale and Binance’s measured response
As FTX entered a severe liquidity crunch in November 2022, its founder Sam Bankman-Fried called Changpeng Zhao directly to discuss potential support. Zhao recounts that Bankman-Fried openly and calmly requested billions of dollars in assistance. Despite the request, Zhao clarifies he had no real interest in acquiring FTX. Instead, he initiated talks out of concern for possible wider fallout for users and the broader sector.
During this whirlwind period, Binance signed a non-binding letter of intent to potentially acquire FTX. Zhao underscores that this document served purely as a formality and involved no commitment to a purchase. The move gave Binance the opportunity to examine FTX’s financials more closely, but did not obligate them to proceed.
The Alameda maneuver and triggering of the FTT token crisis
A pivotal moment arrived when Caroline Ellison, CEO of Alameda Research—FTX’s sister trading firm—publicly offered to buy Binance’s substantial holdings of FTT tokens at $22 per token. Zhao says this announcement effectively telegraphed the intended buy price to the wider market, providing professional investors with crucial information about the health and value of the token.
The market reacted swiftly to Ellison’s statement, with FTT prices plummeting in a matter of hours—first to $15, then $10, and eventually down to $5. Panic among investors escalated rapidly, resulting in withdrawals exceeding $6 billion from FTX in just three days. This run on withdrawals left FTX struggling for survival.
Zhao’s memoir also sheds light for the first time on the “Exchange Collaboration” Signal group, established by former FTX staffer Zane Tackett in the wake of the Terra/LUNA crisis. Notable group members included Zhao, Coinbase CEO Brian Armstrong, and Kraken CEO Jesse Powell. The group’s activities later attracted scrutiny from the US Department of Justice and the Securities and Exchange Commission. Zhao maintains there was no coordinated market action among the exchanges, explaining their interactions were transparent to authorities.
On November 9, Binance officially withdrew from any proposed acquisition of FTX. By that time, the value of Binance’s FTT holdings had collapsed from $580 million to nearly nothing. This loss echoed a previous episode six months earlier, when Binance endured major losses during the Luna fiasco.
In the weeks that followed, Binance faced its own wave of heavy withdrawals. On December 14, users pulled $7 billion from the platform in a single day. Zhao recalls dining with friends that evening and describes not feeling any particular concern about the development.
Zhao emphasized that all user assets remained backed by reserves, and noted that not only did all withdrawn funds return to the exchange within a month, but deposits actually exceeded previous levels during the same period.
