Report Says Binance CEO Changpeng Zhao Rejected SBF's $40M Futures Trading Request

Binance CEO CZ reportedly refused to pay former FTX CEO SBF $40 million in March 2019, according to an excerpt from Michael Lewis’ book Going Infinite: The Rise and Fall of the Rise and Fall. For futures cryptocurrency exchanges.

The book states that SBF proposes to establish a zero-risk futures exchange to deal with high-leverage bad transactions. Traditionally, futures exchanges have allowed traders to leverage funds with a small amount of collateral, and if trades start to go bad, the exchange will often require traders to increase their collateral.

In the cryptocurrency space, price fluctuations can be rapid and significant, which can cause exchanges to incur bad debts due to lack of collateral. However, FTX wants to create a futures exchange that monitors trader activity and liquidates users’ positions once trades exceed collateral, thus limiting any potential losses to the exchange.

The book shows that Binance and FTX had different goals when the SBF proposed it in 2019. FTX hopes to cater to institutional investors, while Binance focuses on retail clients. After considering the proposal for several weeks, CZ reportedly rejected SBF’s request for funding and went ahead with creating an in-house futures platform.

The author of the book claims that CZ’s decision was not popular with the SBF, who reportedly called the Binance CEO a “**”. After Binance’s denial, FTX created its own FTX Futures exchange in 2019, but its success is uncertain. An excerpt from the book quoting SBF is as follows:

It’s worth billions of dollars if it works, but I think there’s more than a fifty percent chance it won’t. I've never done marketing. I've never talked to the media. I never had customers. It's unlike anything I've ever done before.

This is not the only incident where SBF and CZ met. In 2022, when the FTX liquidity crisis was exposed, FTX once again sought acquisition from Binance, but CZ refused, claiming that the platform was irretrievable.

The latest revelations come as the former FTX CEO’s trial begins in New York, where he faces multiple fraud and money laundering charges related to FTX’s collapse.

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