SBF tried to destabilize crypto market to save FTX: Report

Tether executives and Binance CEO Changpeng “CZ” Zhao were concerned that Sam Bankman-Fried (SBF), former FTX CEO, was trying to destabilize the crypto market with the aim of saving the now-bankrupt exchange, according to reports on December 9.

Messages seen by The Wall Street Journal from a Signal group chat called “Exchange coordination” reveal an argument between CZ and SBF on November 10 over Tether’s stablecoin USDT.

According to the report, CZ and others in the group were concerned that trades made by Alameda Research focused on depegging the stablecoin, which would have a ripple effect in crypto prices. Binance CEO reportedly confronted SBF:

“Stop trying to depeg stablecoins. And stop doing anything. Stop now, do no more damage.”[ads1];

SBF rejected the allegations in a statement to the WSJ. Members of the Signal group include Kraken co-founder Jesse Powell, Tether CTO Paolo Ardoino.

The alleged argument occurred a day after Binance announced it would not bail out its troubled competitor FTX, citing “reports of misused customer funds and alleged US agency investigations.” On Nov. 10, Tethers Ardoino said the company has no “plans to invest or lend money to FTX/Alameda.”

As reported by Cointelegraph, new details about the failed deal between Binance and FTX were revealed on December 9. In a twitter thread, CZ referred to Bankman-Fried as a “fraudster” and said that Binance exited its position in FTX in July 2021 after becoming “increasingly uncomfortable with Alameda/SBF.” SBF was “unhinged” when the exchange pulled out, according to Binance’s CEO.

In response, SBF claimed that Binance “threatened to leave at the last minute”, and accused CZ of lying about its role in the deal.

On November 11, FTX Group and nearly 130 companies – including FTX Trading, FTX US, under West Realm Shires Services and Alameda Research – filed for bankruptcy in the US citing a “liquidity crisis”.

Since FTX’s bankruptcy, SBF has been named in seven class-action lawsuits and a number of inquiries and investigations, including a market manipulation probe by federal prosecutors.