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Inside SBF’s feud with Binance’s Changpeng Zhao: ‘Well played, you won’

Inside SBF’s feud with Binance’s Changpeng Zhao: ‘Well played, you won’
The actions of Binance CEO Changpeng Zhao, right, helped sink Sam Bankman-Fried's empire. Credit: Rita Fortunato/DL News

About a year ago, right before his crypto exchange filed for Chapter 11 bankruptcy, FTX founder Sam Bankman-Fried posted a cryptic tweet: “At some point I might have more to say about a particular sparring partner, so to speak.”

“For now, all I’ll say is: well played; you won.”

Bankman-Fried was most likely referring to Changpeng Zhao, the exchange giant Binance CEO also known simply as CZ.

The post was part of an apology thread Bankman-Fried wrote to investors during the FTX collapse, as billions in customers’ money sat in limbo. It was around then that any hopes that Binance might buy its beleaguered rival shriveled.

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Bankman-Fried, who has pleaded not guilty to federal charges of fraud and other crimes, in court filings blamed Binance’s Zhao for leaking a document that was damaging to FTX, sparking its downfall.

Who is Changpeng Zhao?

Zhao, who has led the world’s largest global crypto exchange since 2017, faces legal battles of his own.

Regulators including the US Securities Exchange Commission and Commodities and Futures Exchange Commission have charged Binance with operating an unlawful exchange and other securities violations.

Amid an ongoing investigation by the Department of Justice, Binance customers are bracing for a potential disruption to crypto markets should more regulatory headaches come for Zhao and Binance. Binance has denied wrongdoing and has said it is cooperating with regulators. The company did not immediately respond to a request for comment for this story.

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Earlier this month, FTX customers filed a class-action lawsuit accusing Zhao of manufacturing FTX’s downfall.

As evidence of what the lawsuit calls Zhao’s “vendetta” against Bankman-Fried: a series of inflammatory tweets, a targeted information leak, and Binance’s mass liquidation of its reserve of FTX’s token, FTT, during the days up to the collapse.

The feud

In “Going Infinite: The Rise and Fall of a New Tycoon,” Michael Lewis’s new FTX tell-all, the early days of the Bankman-Fried and Zhao relationship was a business partnership.

It kicked off in 2018 when Bankman-Fried “effectively paid for CZ to be his friend,” Lewis wrote, by paying $150,000 to sponsor a Binance conference in Singapore.

In 2019, Zhao purchased a 20% share of FTX for $80 million.

FTX turned out to be a hit in the crypto world, so much so that within 18 months of FTX’s launch, “CZ developed what three of his employees at the time described as an obsession” with FTX, Lewis writes.

In time, the threat FTX posed to Binance’s dominance became his primary concern outside of his own business.

By 2021, both sides had reasons to end the friendship.

FTX was a rising star with a steadily-growing market share. Its name was plastered on a Miami sports arena, and its roster of celebrity endorsements gave the brand a legitimacy that was the envy of the industry.

The exchange’s success in the US was also showing the potential to ingratiate the company to regulators. Large political donations across the spectrum hinted at its possible role as a leader in crypto regulation. This position would allow FTX to steer crypto policy in ways that benefited FTX and hurt other firms such as Binance.

For Binance’s part, it was the established leader among crypto companies.

A multi-billion dollar giant with upwards of 50% of the global crypto market share, Binance flexed its muscles against FTX in 2021 when Bankman-Fried decided that Binance’s testy relationship with the law was a liability, prompting FTX to pay a $2.2 billion buyout for Zhao’s initial $80 million share of the company. Lewis quotes Bankman-Fried as saying “from then, it was a cold war.”

Lewis recounts examples of earlier “dustups” in the book, including a series of back-and-forth tweets in 2019 when Zhao accused a “market maker from a smaller futures exchange” of trying to attack Binance via wash trading. According to Lewis, the tweet was a confused response to ongoing bouts of market manipulation by Alameda traders on Binance’s platform. Instead of dealing with each other directly, the two now began a pattern of posting thinly-veiled, public facing tweets at each other.

None of this budding animosity, however, would have the impact of the events that started in late October of 2022.

A large part of FTX’s campaign to outcompete Binance revolved around regulation — particularly Bankman-Fried’s plan to paint Binance as a violator of rules. “In these [crypto] woods,” writes Lewis, “CZ was the biggest bear and Sam seemed to be going out of his way to poke him.”

In one instance, Alameda Research CEO Caroline Ellison, wrote “getting regulators to crackdown on Binance” as a priority in a Google Doc titled “Things Sam is freaking out about.”

Zhao and the FTX collapse — a timeline

October 30: In a culmination of Bankman-Fried’s efforts to highlight Zhao’s shaky relationship with US regulators, on October 30, 2022, he posts in a now-deleted tweet: “excited to see [Zhao] repping the industry in DC going forward! uh,[sic] he is still allowed to go to DC, right?”

November 2: CoinDesk publishes an article that suggests much of Alameda’s liquidity rests on FTT — the token minted by sister firm FTX.

November 1-5: $200 million in funds leave FTX.

November 6: Zhao tweets Binance’s intent to liquidate its remaining FTT — about $550 million worth– in light of CoinDesk’s document. Zhao said he expected the liquidation over “a few months,” but FTT’s price collapses after the tweet. Customers withdraw $2 billion in funds in a single day.

November 7: Customers clamour to withdraw funds as over $5 billion exits the platform. Lewis writes FTX “didn’t formally shut down withdrawals, but it more or less stopped actually sending money back to the customers.” FTT drops from $22 to $7.

November 8: Bankman-Fried calls Zhao and, as Lewis relays in Bankman-Fried’s words, “[starts] grovelling” for Binance to acquire FTX and save the exchange. They sign a letter of intent (LOI) which gives Binance the option to purchase all FTX entities other than its US arm, FTX.US. As part of the deal, Zhao is permitted to see FTX and Alameda Research’s finances, the first outsider to “see into the dragon’s lair,” writes Lewis.

November 9: Binance’s official account tweets that it won’t purchase FTX, citing “corporate due diligence” as well as recent reports of improper handling of customer funds and potential criminal investigations as reason for exiting the deal.

What comes next?

So far, Bankman-Fried’s legal team has elected several witnesses to testify in its round of questioning, including a financial analyst and a Bahamas-based lawyer.

If Bankman-Fried is convicted, he could face decades in prison, as well as the potential for new rounds of charges from criminal and civil regulators such as the SEC and CFTC. Meanwhile, FTX is in the process of a reboot as bankruptcy proceedings press onward. Negotiations are also underway for FTX investors to get some of their money back.

As for Zhao, Binance sought earlier this week for courts to dismiss the CFTC’s case, on grounds it was functioning as a “Trojan Horse.”

Binance argued the case would allow gross overreach by US regulators to enforce beyond US borders. The SEC’s case remains fairly hush-hush, as the presiding judge ordered motions to be sealed back in August.

Tyler Pearson is a researcher at DL News. He is based out of Alberta, Canada. Got a tip? Reach out to him at