In Michael Lewis’ book “Going Infinite,” the story of Binance CEO Changpeng “CZ” Zhao’s decision to turn down an offer from former FTX CEO Sam Bankman-Fried to invest $40 million in creating a cryptocurrency futures exchange is recounted. Instead, Binance chose to develop a futures exchange internally, leading to the establishment of FTX by Bankman-Fried. However, FTX faced financial difficulties and ultimately filed for bankruptcy in 2022.
Bankman-Fried initially had the vision of creating a cryptocurrency futures exchange but was unsure of how to proceed in terms of attracting customers and promoting the platform. In 2018, he launched CryptonBTC, a bitcoin exchange, without a clear strategy for customer acquisition. His team proposed the idea of developing a futures platform for existing Crypto Exchanges, with Alameda providing the technology and the other exchanges bringing in customers.
CZ expressed concerns about this proposed design, specifically the potential for a single unfavorable trade resulting in a complete loss of collateral. Bankman-Fried’s alternative design, which involved constant monitoring of trades and immediate liquidation of positions in the event of losses, was more reassuring.
The relationship between Bankman-Fried and CZ began when Bankman-Fried sponsored a Binance conference in early 2019. This collaboration led to Zhao appearing on stage with Bankman-Fried, and while Bankman-Fried believed this added legitimacy to their presence in the crypto space, it did not provide him with a deep understanding of Zhao’s decision-making style.
To secure funding for his project, Bankman-Fried introduced the FTX token (FTT), which offered holders a share of FTX’s annual revenues. In May 2019, despite facing regulatory hurdles in the U.S., FTX generated 350 million FTT Tokens aimed at international investors. Some were offered to FTX employees and key figures in the crypto industry, including CZ, at various prices. Most declined the offer, except for one FTX employee and Salame.
However, there was outside interest in the tokens at prices higher than the initial offering. When FTT was eventually listed on FTX and made available to the general public, it opened at $1 and traded up to $1.50.
Shortly before the listing, Bankman-Fried coincidentally met Zhao at a crypto conference and they exchanged greetings. This encounter seemed to spark more interest in Bankman-Fried from Zhao, leading to him reaching out later to offer to purchase a 20% stake in FTX for $80 million.
Overall, this story highlights the complex dynamics and decision-making processes involved in the Development of cryptocurrency exchanges. It also showcases the risks and challenges faced by entrepreneurs in the crypto industry, including regulatory hurdles and financial difficulties..
#Declined #Million #Investment #Offer #SBF
Bankman-Fried initially had the vision of creating a cryptocurrency futures exchange but was unsure of how to proceed in terms of attracting customers and promoting the platform. In 2018, he launched CryptonBTC, a bitcoin exchange, without a clear strategy for customer acquisition. His team proposed the idea of developing a futures platform for existing Crypto Exchanges, with Alameda providing the technology and the other exchanges bringing in customers.
CZ expressed concerns about this proposed design, specifically the potential for a single unfavorable trade resulting in a complete loss of collateral. Bankman-Fried’s alternative design, which involved constant monitoring of trades and immediate liquidation of positions in the event of losses, was more reassuring.
The relationship between Bankman-Fried and CZ began when Bankman-Fried sponsored a Binance conference in early 2019. This collaboration led to Zhao appearing on stage with Bankman-Fried, and while Bankman-Fried believed this added legitimacy to their presence in the crypto space, it did not provide him with a deep understanding of Zhao’s decision-making style.
To secure funding for his project, Bankman-Fried introduced the FTX token (FTT), which offered holders a share of FTX’s annual revenues. In May 2019, despite facing regulatory hurdles in the U.S., FTX generated 350 million FTT Tokens aimed at international investors. Some were offered to FTX employees and key figures in the crypto industry, including CZ, at various prices. Most declined the offer, except for one FTX employee and Salame.
However, there was outside interest in the tokens at prices higher than the initial offering. When FTT was eventually listed on FTX and made available to the general public, it opened at $1 and traded up to $1.50.
Shortly before the listing, Bankman-Fried coincidentally met Zhao at a crypto conference and they exchanged greetings. This encounter seemed to spark more interest in Bankman-Fried from Zhao, leading to him reaching out later to offer to purchase a 20% stake in FTX for $80 million.
Overall, this story highlights the complex dynamics and decision-making processes involved in the Development of cryptocurrency exchanges. It also showcases the risks and challenges faced by entrepreneurs in the crypto industry, including regulatory hurdles and financial difficulties..
#Declined #Million #Investment #Offer #SBF
