CZ Says Binance Never Saw FTX as Competition.
Binance Chief CZ has dispelled claims that Binance sought to dump its FTT holdings as a strategy against FTX, noting that they never saw FTX as a competition.
Changpeng Zhao “CZ”, Chief Executive of Binance, has come up to disprove the widely-held notion that Binance’s decision to dump its FTT holdings was a strategic move against FTX, claiming that his exchange never regarded FTX as a competition in the crypto space.
CZ made these remarks while speaking in a CNBC Squawk Box interview as he sought to weigh in on the recent FTX collapse, its correlation with Binance, and the effects of the fall on the broader crypto space in the future.
When asked if he regrets tussling with FTX’s Sam Bankman-Fried, CZ mentioned that Binance was never in any battle with SBF. If SBF regarded the field as a battle space, with Binance as the opponent, CZ highlighted that they never noticed it because they never saw FTX as a competition.
“We were never in a battle with him (SBF). He may think he’s in a battle with us. We didn’t even notice,” CZ commented. Notwithstanding, he revealed that Binance’s decision to sell off its stake in FTX was triggered by revelations of SBF badmouthing them in DC and other political lobbying circles.
Recall that Binance decided to exit its FTX equity in July of 2021, leading to the exchange receiving $2.1B in Binance USD (BUSD) and FTT – FTX’s native token. This exit came almost two years after Binance noted that it had invested an undisclosed amount in FTX in December 2019.
Furthermore, CZ noted that the recent decision to sell off the FTT Binance received from its FTX exit was also prompted by reports of a looming FTX insolvency and not necessarily as a strategy to take out a competitor.
“That’s all we did. We were never against them. We don’t focus on other smaller exchanges; focusing our energy there doesn’t give us the best return,” CZ said. He added that helping to grow the industry would bring in more clients than taking customers from other exchanges. Hence, Binance wishes to grow the industry “together with other exchanges.”
CZ does not believe in a BTC and ETH monopoly.
Furthermore, following the FTX debacle and the collapse of FTT, CZ claims that bitcoin and Ethereum are the only tokens that will remain standing at the end of the day. When asked what he thinks about this, CZ mentioned that he believes the crypto space is far from a one-coin-take-all industry.
“If you look at the industry 5-10 years from now, the industry will be much, much bigger. I don’t think bitcoin and Ethereum will be the only coins to profit.”
He highlighted that despite the recent fiascos, he doesn’t believe the industry has got a house of cards situation on its hands, noting that the space is going to get bigger, and several other projects currently building are going to benefit from it, not just BTC and ETH.
CZ sought to quell any concerns of a Binance insolvency
Additionally, inquiries on Binance’s holdings were made. CNBC’s Squawk Box host, Becky Quick, sought to understand where Binance got its marks and valuations as she asked CZ how confident he is in the veracity of the claims made.
Recall that on November 11, as the FTX saga began escalating, Binance’s holdings came to the limelight, as reported by Bloomberg. Holding $74.7B in assets, 40% of its holdings were in BUSD and BNB.
In response to Quick’s inquiry, CZ noted that the holdings refer to customer assets and not Binance’s assets. “The assets we disclosed were 100% user assets – it just means users were holding that much BUSD on our platform. We don’t do any conversions; it’s just held as is,” CZ said.
Due to the FTX implosion being tied to the exchange’s holdings of its native token, FTT, in illiquid assets, questions have been raised on account of Binance holding BUSD and BNB. CZ had to disclose that those assets are user assets and not other tokens converted to BNB or BUSD.
“Our internal operating funds, we have about a third of stable coins. We’re still profitable, so we don’t dig into our reserves for money,” he added, attempting to quell any insolvency concerns.
CZ revealed the reason behind pulling out of the FTX bailout.
Furthermore, when asked why Binance decided to pull out of the FTX bailout deal, CZ highlighted a few pointers that influenced the move. He revealed that the Binance team noticed a major misappropriation of FTX users’ funds, noting that they could not trust any more data with the realization that SBF had lied to everyone, including his customers and investors.
“It was pretty clear pretty soon that there was misappropriation of user funds. At that point, it was clear he was lying to his users, his investors, and his employees,” CZ remarked.
Recall that Binance agreed on November 8 to purchase FTX as the worrisome situation progressed, as The Crypto Basic reported. Notwithstanding, following a due diligence exercise carried out on FTX’s sheets, Binance revealed that the situation was worse than expected, as it pulled out of the deal.