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CZ Finally Reveals Hidden Story Behind Binance Exit From FTX

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CZ Finally Reveals Hidden Story Behind Binance Exit From FTX

The relationship between Binance and FTX has long been one of the most debated rivalries in crypto. Now, Changpeng Zhao (CZ) is offering one of his most detailed public accounts yet.

CZ describes how cooperation turned into competition well before FTX’s 2022 collapse.

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CZ Lifts the Curtain on Binance’s Secretive Break With FTX

Speaking on the All-In Podcast, the former Binance CEO traced the relationship back to early 2019, when he first met Sam Bankman-Fried (SBF), then running Alameda Research.

“Uh, I think I first met him in January 2019 in one of the Singapore conferences Binance organized. I think FTX did not exist at the time… Sam… was running Alameda,” CZ said, recalling that Alameda was then a major trading client on Binance and relations were initially friendly.

According to CZ, Alameda and the future FTX team soon approached Binance with proposals to collaborate on a derivatives platform. Several offers were made over time, including a joint venture structure that would have favored Binance.

Eventually, in late 2019, Binance agreed to invest.

“Yeah… we invested in them only 20% as equity at some point, and then we exited a year… later… we didn’t stay there for very long,” CZ said.

The deal included a token swap involving BNB and FTT, and Binance became a minority shareholder. CZ emphasized that:

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  • He remained a passive investor throughout the relationship
  • Chose not to request financial statements because both firms operated competing futures businesses.

“Because of the competitive nature in the businesses… I never really… ask them for financial statements… I’m a very passive investor. So when I invest, I don’t get involved in their business,” he said.

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Binance-FTX Tensions Beneath the Surface

Despite the early cooperation, CZ said relations deteriorated quickly. Reportedly, he began hearing reports that SBF was criticizing Binance in policy and regulatory circles in Washington.

“And then almost as soon as we did that deal, I kept hearing from my friends… SBF badmouthing us in the Washington circles,” CZ said.

He also described frustration over hiring practices, alleging that FTX recruited Binance staff by offering dramatically higher salaries. Allegedly, FTX would then use those hires to approach Binance’s VIP clients with competing offers.

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While CZ said he attempted to maintain a cooperative tone publicly and even agreed to appear jointly at industry events, he suggested the rivalry was already intensifying behind the scenes.

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Why Binance Exited

By early 2021, FTX was raising capital at valuations reportedly reaching $32 billion. CZ said Binance had contractual veto rights over future funding rounds but chose not to exercise them.

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“So… we said… why don’t we exit, actually?” CZ recalled, explaining that Binance preferred to compete freely rather than remain a shareholder in a fast-growing rival.

The exit was finalized in July 2021, roughly a year and a half before FTX collapsed in November 2022.

“This is like a full year and a half before they had issues… at the time we didn’t know,” he said, rejecting claims that Binance exited because of inside knowledge. “That’s categorically not true.”

FTX Collapse and Its Aftermath

FTX ultimately failed after revelations that customer funds had been misused to cover losses at Alameda Research, triggering a liquidity crisis and bankruptcy.

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Binance’s decision in November 2022 to liquidate its FTT holdings accelerated a bank run. However, subsequent investigations and court proceedings concluded that the core cause of the collapse was internal fraud and mismanagement.

CZ declined to comment extensively on ongoing legal disputes, including efforts by the FTX bankruptcy estate to recover funds from the 2021 exit. However, he reiterated that Binance had no visibility into FTX’s internal finances while it was a shareholder.

Taken together, CZ’s account portrays the Binance–FTX relationship not as a sudden breakdown but as a gradual unraveling. If his remarks are any guide, the relationship was marked by early cooperation, growing rivalry, and a strategic exit long before the crisis that reshaped the crypto industry.

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SBF did not immediately respond to BeInCrypto’s request for comment about CZ’s claims.

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Crypto World

Grayscale Files With SEC to Convert Aave Trust Into ETF

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Grayscale Files With SEC to Convert Aave Trust Into ETF

Crypto asset manager Grayscale filed for regulatory approval to convert its trust tracking the token of the decentralized lending protocol Aave into an exchange-traded fund (ETF).

The company filed a Form S-1 registration statement with the Securities and Exchange Commission on Friday, saying it intends to convert the trust and rename it the Grayscale Aave Trust ETF.

Grayscale added that it plans to list the fund on NYSE Arca, one of the most popular exchanges for trading ETFs, under the ticker “GAVE.” It will charge a 2.5% fee, and Coinbase will serve as both its custodian and prime broker.

Source: Henry Jim

Grayscale’s filing is one of several ETFs seeking to track altcoins, suggesting that Wall Street still has an appetite for crypto exposure even amid a market downturn.

Aave is the largest decentralized finance protocol, with over $27 billion in total value locked, according to DefiLlama. The platform allows users to lend and borrow crypto across multiple blockchains, and the AAVE token can be staked to earn yield.

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Grayscale joins Bitwise in Aave ETF race

With its filing, Grayscale is the second to seek US regulatory approval for an ETF tied to Aave (AAVE), currently joining only Bitwise in looking to launch a similar fund.

Bitwise filed with the SEC in December to launch the Bitwise AAVE Strategy ETF, among a slew of filings that sought to create ETFs tied to popular altcoins, including Uniswap (UNI) and Zcash (ZEC).

Bitwise’s ETF plans to hold up to 60% of its assets directly in AAVE tokens and at least 40% in securities, such as other ETFs that are exposed to AAVE, while Grayscale’s would hold AAVE tokens directly.

Related: Roundhill’s election prediction ETFs are ‘potentially groundbreaking’: Analyst

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The two ETFs are set to be the first in the US to offer direct exposure to Aave, joining a short list of overseas products that have launched to track the token.

In Europe, 21Shares launched an Aave exchange-traded product on the Nasdaq Stockholm in November, several years after Global X launched a similar Aave product in Germany in early 2023.

The AAVE token has traded down 1.6% over the past day to $126 and is more than 80% off its all-time high of nearly $662, reached in May 2021 amid a bull market for altcoins, according to CoinGecko.

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