In an intriguing revelation, it has been reported that Binance CEO, Changpeng Zhao (CZ), turned down a $40 million proposition from former FTX CEO, Sam Bankman Fried (SBF), for a groundbreaking futures crypto exchange back in March 2019. This revelation comes to light through an excerpt from Michael Lewis’ recently published book, “Going Infinite.”
SBF’s proposal outlined a futures exchange designed to mitigate risks for the platform in the event of unfavorable trades with high leverage. Traditional futures exchanges necessitate traders to augment collateral when trades show signs of turning unfavorable. However, the volatile nature of cryptocurrencies can lead to rapid and substantial price swings, potentially leaving exchanges with unsettled debts due to insufficient collateral.
FTX sought to revolutionize this landscape by developing a futures exchange that would vigilantly monitor traders’ activity. In the event that a trade exceeded the collateral, the platform would promptly liquidate the user’s positions, thereby curbing potential losses for the exchange.
According to Lewis’ account, at the time of SBF’s proposal, Binance and FTX had divergent objectives. FTX aspired to cater to institutional investors, while Binance’s focus was predominantly on retail customers. After careful consideration of the proposition, CZ ultimately declined the funding request from Sam and instead chose to embark on the development of an in-house futures platform.
The author asserts that CZ’s decision left SBF disheartened, prompting him to allegedly label the Binance CEO as a “douche” in response to the rejection. Following Binance’s refusal, FTX proceeded to forge ahead with the creation of its own FTX futures exchange in 2019, although there was uncertainty about its potential for success.
This revelation sheds light on a pivotal moment in the history of cryptocurrency exchanges, underscoring the differing strategies pursued by industry leaders during a transformative period for the digital asset landscape.
Source: Cointelegraph
