The Bold Proposal from SBF

Back in March 2019, Sam Bankman-Fried (SBF), then CEO of FTX, approached Changpeng Zhao, better known as CZ, with a riveting proposal: a futures exchange that promised ‘zero risk’ for bad trades even when using high leverage. A bit audacious, right? I mean, who doesn’t like zero-risk investments, especially in the volatile world of crypto?

How It Was Supposed to Work

The concept behind SBF’s bold venture was fascinating. For those who keep their crypto knowledge in the casual range, a futures exchange allows traders to borrow money to trade much larger amounts than what they actually own. This increases potential earnings but also magnifies the risks, especially when crypto prices can swing like a pendulum after too much coffee. FTX’s angle was to ensure they would liquidate a trader’s position if things got too dicey.

• Monitor Activity: The exchange would keep an eye on trades.
• Automatic Liquidation: Should collateral be at risk, out goes the position—like an unwanted party guest.
• Limit Losses: By cutting off trades, they aimed to keep FTX’s balance sheets relatively tidy.

Different Visions: Binance vs. FTX

At the heart of the matter was a clash of intentions. While SBF had his sights set on attracting institutional investors, CZ was more focused on the retail crowd—those of us who trade crypto in pajamas at home like it’s a weekend Netflix binge. After mulling over SBF’s request, CZ ultimately turned him down, choosing instead to develop an in-house futures platform. Talk about dodging a bullet!

The Aftermath of Rejection

Apparently, SBF was not taking the denial gracefully. He reportedly branded CZ a “douche,” which could mean ‘Not the best business partner’ in crypto parlance. Following this not-so-friendly exchange, FTX rolled out its own futures trading platform, albeit with fingers crossed over its success. In SBF’s own words:

“If it works it is worth billions of dollars, but I thought there was a better than fifty per cent chance it wouldn’t work.”

When Lightning Strikes Twice

Fast forward to 2022, the two titans crossed paths again. As the FTX liquidity crisis unfolded, SBF found himself reaching out to CZ once more. The response? A hard pass. CZ saw FTX as a sinking ship—too waterlogged to save. It was a case of ‘fool me once, shame on you, fool me twice…’

The Ongoing Trial

These competitive, and rather spicy, moments now take on an added layer of tension as SBF’s trial kicks off in New York. He faces charges that could make even the toughest among us break into a nervous sweat. The drama, folks, is only just beginning!

Conclusion: Lessons Learned

This saga teaches us more than just business dynamics; it shows how decisions in the fast-paced world of crypto can lead to legendary rivalry, hefty reputations, and sometimes, a cautionary tale. Whether one feels sympathy for SBF or not, the crypto landscape is an adventure where fortunes can turn faster than you can say ‘blockchain.’ So, hold onto your wallets, folks!