Sunday, 3 December 2023

Crypto News

Changpeng Zhao’s tweet ‘contributed’ to collapse of FTX, claims Caroline Ellison

Changpeng Zhao's tweet 'contributed' to collapse of FTX, claims Caroline Ellison

According to former Alameda Research CEO Caroline Ellison, a single tweet from Binance CEO Changpeng Zhao (CZ) contributed to the failure of cryptocurrency exchange FTX.

Testifying in Sam “SBF” Bankman-Fried’s criminal trial on Oct. 12, Ellison reportedly placed part of the blame for the collapse of FTX on CZ’s social media activity. In the now famous tweet on X (formerly Twitter) from Nov. 6, 2022, CZ announced that Binance would be liquidating its holdings of FTX Token (FTT) “due to recent revelations that have came [sp] to light”.

The liquidation of the tokens, according to many reports, caused retail investors to follow Binance’s example and withdraw funds from FTX. The run on the platform led to FTX halting withdrawals and filing for bankruptcy on Nov. 11.

According to Ellison, although the tweet “contributed” to FTX’s collapse, the main reason was Alameda borrowing $10 billion from the exchange “it couldn’t repay”. She first took the stand in SBF’s trial on Oct. 10, testifying to Bankman-Fried directing her to have Alameda take billions of dollars from FTX without users’ consent.

CZ pushed back against claims one of his tweets “destroyed FTX” in a Dec. 6 thread, saying “no healthy business can be destroyed by a tweet”. He pointed to Ellison’s own social media activity from Nov. 6, claiming Alameda’s offer to buy Binance’s FTT holdings “was the real cause for people to dump” the tokens.

Among the information provided by the former Alameda CEO at trial included Bankman-Fried’s ambition to become the President of the United States, creating multiple “alternative” spreadsheets of Alameda’s financials to present to Genesis, and SBF looking to Saudi Crown Prince Mohammed bin Salman as a potential backer of the exchange. Her testimony on cross examination from defense counsel Mark Cohen seemed to focus on Bankman-Fried’s…

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