Binance CEO Shares Lessons From FTX’s Collapse

  • Binance CEO CZ advised crypto firms against using their native tokens as collateral and against borrowing.
  • FTX had a liquidity crisis after CZ tweeted that Binance would liquidate its FTT holdings.
  • A recent Bloomberg post has revealed that Sam Bankman-Fried has lost a chunk of his fortune, taking him off the company’s top 500.

With the battle of the titans officially over, Binance CEO, Changpeng “CZ” Zhao has emerged as the superpower of the market after seeing off his biggest competitor, FTX. CZ later took to Twitter to share “two big lessons” from the FTX situation. The crypto billionaire advised exchanges against using their native tokens as collateral and also to keep large reserves.

Binance submitted a non-binding letter of intent to acquire FTX after the exchange had liquidity problems. Sharing from his wealth of experience, the 45-year-old CZ advised crypto companies against borrowing, adding that “Binance has never used BNB for collateral, and we have never taken on debt.”

FTX’s liquidity problems were triggered by a post made by CZ, in which he claimed Binance would liquidate its FTT holdings, citing “recent revelations.” FTX users recently complained about sluggish withdrawals, sparking fears the exchange did not have enough to cover user funds.

The specifics of the takeover are yet unknown, but it does not involve FTX.US, the exchange’s American subsidiary, which was valued at about $8 billion earlier this year.

SBF Falls From Bloomberg’s Billionaire List

Sam Bankman-Fried was one of the few crypto billionaires, with his wealth once said to have approached $20 billion. However, SBF might not have the luxury of his “billionaire” title anymore after losing 94% of his personal wealth due to the recent crisis. According to the Bloomberg Billionaires Index, SBF no longer appears in the company’s top 500.

Bankman-Fried emerged as one of the most vocal and powerful figures in the crypto world. Aside from acquiring embattled firms, SBF expanded his influence into the US political space, using his financial power to push politicians that support his ideologies. Bloomberg reported that SBF could see his wealth diminish should Binance successfully acquire FTX.

Bankman-Fried owned a 53% share in FTX. Before the news of a potential takeover broke, FTX was valued at $6.2 billion. SBF also retained his ownership of Alameda Research, increasing his wealth by an additional $7.4 billion.

The Bloomberg wealth index values the two companies at just $1, which estimates that Bankman-Fried and current investors will lose everything due to the Binance acquisition. As a result, Bankman-Fried’s value decreased from $15.6 billion on November 8 to approximately $1 billion, marking the biggest single-day collapse that Bloomberg recorded.

Lawrence Woriji
Lawrence Woriji Verified Author

I have covered some exciting stories in my career as a journalist and find blockchain-related stories very intriguing. I believe Web3 will change the world and want everyone to be a part of it.

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