Battle of the Billionaires
Battle of the Billionaires
It's a brand new week in crypto. It's new drama. It's CZ vs SBF.
Never miss a Web3 opportunity. Search for unclaimed airdrops, POAPs, NFTs with Earnifi.
Dear Bankless Nation,
It’s the Battle of the Billionaires. CZ and SBF, the CEOs of centralized exchanges Binance and FTX, are facing off.
Crypto twitter regulars may have noticed the CEOs trading passive-aggressive barbs for the past several months.
But things have escalated dramatically over the past several days with CZ announcing that Binance was planning to sell the entirety of their stake in FTT (FTX’s native token), while FTX has experienced mass-withdrawals over the last 48 hours.
This chaos comes following SBF’s debate against Erik Voorhees on Bankless and a CoinDesk report on the balance sheet of Alameda Research, a trading firm founded and owned by the FTX CEO.
It’s unclear what exactly prompted the bad blood between the two crypto titans.
Despite being competitors, Binance was an early investor in FTX. However, we may have some clues based on recent CZ tweets, as he alludes to industry players lobbying against one another.
This saga has had so many twists and turns that it could make your head spin.
So let’s break down the situation so we can see what, if anything, may come of it.
The Opening Salvo
On November 2, CoinDesk published their report on the composition of Alameda’s balance sheet.
In the article, CoinDesk claims to have reviewed a “private financial document” which showed that on June 30, Alameda had $14.6B in assets, including holdings of $3.6B in “unlocked FTT,” and $2.6B in “FTT collateral,” against $8B in liabilities.
Despite being light on details, this caused rampant speculation that Alameda could be in trouble should the price of FTT fall. Given SBF’s close ties to the trading firm, many wondered whether or not FTX would be caught up in any sort of Alameda-related contagion.
While it is noted that we do not have any insight into Alameda’s books, there are large on-chain CDPs on protocols like Abracadabra that are being collateralized by FTT.
Sunday Not So Funday
Things escalated further on November 6 when Alameda CEO Caroline Ellison tweeted that the CoinDesk report showed an incomplete picture of the firm's balance sheet.
Shortly after, CZ struck back with a tweet that Binance was looking to offload the entirety of their remaining FTT holdings over the next few months.
Caroline’s response to that was as follows:
This back-and-forth caused significant volatility in the price of FTT, which has since stabilized around ~$22.
However, the situation created enough uncertainty to trigger a “run” on FTX, with greater than $790 million in net-withdrawals from the exchange over the past day and a half.
The situation has prompted SBF to take to Twitter, assuring users that the exchange was fully solvent and capable of processing user withdrawals while suggesting that the panic was caused by an unnamed competitor.
The Implications
It’s unclear what, if any, long-term implications this feud will have on the industry as a whole.
It’s certainly not a great look to have the CEOs of two of the largest exchanges fighting on Twitter, especially when crypto is in the crosshairs of regulators.
With that said, there’s always a silver lining.
For instance, the mass withdrawals from FTX has prompted prominent figures like Cobie to call for exchanges to publish cryptographic proof of reserves. This way, customers would be able to verify at all times that exchanges had enough assets on hand to satisfy withdrawals, rather than trust the words of the exchange operators themselves.
Furthermore, the situation demonstrates the stark differences between DeFi and CeFi. DeFi has built in transparency as users can monitor risk in real-time and always tell whether or not a protocol is solvent.
DeFi unironically fixes this. So perhaps the saga will encourage CEXs to emulate their decentralized counterparts.
But in the meantime, we may just have to wait for this billionaire battle to play out.
And remember… not your keys, not your coins.
- Ben
🙏 Together with ⚡️FUEL⚡️
Modular blockchains are the future. L2s alone won’t solve the scaling problem; for this, we need to move toward a modular architecture. Fuel is the fastest execution layer for the modular blockchain stack, enabling maximum security and the highest flexible throughput.
👉 Go beyond the limitations of the EVM: explore the FuelVM
MARKET MONDAY:
Scan this section and dig into anything interesting
Market numbers 📊
Market Opportunities 💰
Yield Opportunities 🌾
What’s Hot 🔥
Money reads 📚
Trending Project: Gearbox (GEAR)📈
Governance Alpha 🚨
Meme of the Week 😂
Job opportunities 🧑💼
Browse more roles (or add your own) at the Bankless Jobs Board
Action steps
🔍 Review your crypto holdings on any centralized entity where you don’t own the keys!
Subscribe to Bankless. $22 per mo. Includes archive access, Inner Circle & Badge.
🙏 Thanks to our sponsor FUEL
👉 Explore the FuelVM and discover its superior developer experience!
Want to get featured on Bankless? Send your article to submissions@banklesshq.com
Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.