A new book by Michael Lewis, titled Going Infinite: The Rise and Fall of a New Tycoon, reveals that Binance CEO Changpeng “CZ” Zhao rejected a $40 million request from former FTX CEO Sam “SBF” Bankman-Fried for a futures crypto exchange in March 2019.
According to the book, SBF proposed a futures exchange with “zero risk” for the exchange in case of bad trades with high leverage. Traditionally, a futures exchange allows traders to leverage funds against a small collateral, and the exchange often asks traders to increase collateral if the trade starts to go bad.
CZ reportedly declined the request because he was concerned about the risks associated with offering a zero-risk futures exchange. He also reportedly believed that SBF was too young and inexperienced to run a successful futures exchange.
SBF was reportedly not happy with CZ’s decision, and he reportedly called the Binance CEO a “douche” for his decision. After the denial from Binance, FTX went on to create its own FTX futures exchange in 2019.
The book also claims that CZ’s decision to reject SBF’s request was the beginning of a rivalry between the two CEOs. Binance and FTX are two of the largest cryptocurrency exchanges in the world, and they have competed head-to-head on a number of occasions.
Implications for the cryptocurrency industry
The revelation that CZ rejected SBF’s request for a futures exchange is significant for a number of reasons. First, it shows that even the biggest and most successful cryptocurrency CEOs are not always willing to take risks. CZ is known for being a risk-taker, but he was clearly concerned about the risks associated with SBF’s proposal.
Second, the revelation highlights the rivalry between Binance and FTX. The two exchanges are competing for dominance in the cryptocurrency market, and their rivalry is likely to continue in the years to come.
Third, the revelation raises questions about the future of futures exchanges in the cryptocurrency industry. If CZ is not willing to offer a zero-risk futures exchange, then it is unlikely that any other major exchange will. This could make it more difficult for traders to use futures exchanges to hedge their risk.
Overall, the revelation that CZ rejected SBF’s request for a futures exchange is a significant event for the cryptocurrency industry. It shows that even the biggest and most successful cryptocurrency CEOs are not always willing to take risks, it highlights the rivalry between Binance and FTX, and it raises questions about the future of futures exchanges in the cryptocurrency industry.