In accordance with former Alameda Analysis CEO Caroline Ellison, a single tweet from Binance CEO Changpeng “CZ” Zhao contributed to the failure of cryptocurrency change FTX.
Testifying in Sam “SBF” Bankman-Fried’s prison trial on Oct. 12, Ellison reportedly positioned a part of the blame for the collapse of FTX on CZ’s social media exercise. Within the now well-known tweet on X (previously Twitter) from Nov. 6, 2022, CZ introduced that Binance could be liquidating its holdings of FTX Token (FTT) “as a result of latest revelations which have got here to gentle.”
As a part of Binance’s exit from FTX fairness final yr, Binance obtained roughly $2.1 billion USD equal in money (BUSD and FTT). On account of latest revelations which have got here to gentle, we have now determined to liquidate any remaining FTT on our books. 1/4
— CZ Binance (@cz_binance) November 6, 2022
In accordance with many studies, the liquidation of the tokens brought on retail buyers to observe Binance’s instance and withdraw funds from FTX. The run on the platform led to FTX halting withdrawals and submitting for chapter on Nov. 11.
In accordance with Ellison, though the tweet “contributed” to FTX’s collapse, the principle motive was Alameda borrowing $10 billion from the change “it couldn’t repay.” She first took the stand in SBF’s trial on Oct. 10, testifying that Bankman-Fried directed her to have Alameda take billions of {dollars} from FTX with out customers’ consent.
CZ pushed again in opposition to claims that one among his tweets “destroyed FTX” in a Dec. 6 thread, saying, “No wholesome enterprise will be destroyed by a tweet.” He pointed to Ellison’s personal social media exercise from Nov. 6, claiming Alameda’s provide to purchase Binance’s FTT holdings “was the actual trigger for individuals to dump” the tokens.
4. “CZ’s tweet destroyed FTX”
No wholesome enterprise will be destroyed by a tweet.
Nevertheless, there was a tweet which will have, Caroline’s tweet 16 minutes after mine on Nov 6. Knowledge exhibits it was the actual trigger for individuals to dump FTT:https://t.co/yWFqKvbqMU
— CZ Binance (@cz_binance) December 6, 2022
The data supplied by the previous Alameda CEO at trial included Bankman-Fried’s obvious ambition to develop into the president of the USA, creating a number of “various” spreadsheets of Alameda’s financials to current to Genesis, and SBF trying to Saudi Crown Prince Mohammed bin Salman as a possible backer of the change. Her testimony on cross-examination from protection counsel Mark Cohen appeared to deal with Bankman-Fried’s data of Alameda’s operations.
On questioning from Cohen, Ellison testified that she “may need mentioned that [SBF] won’t have recognized” about her considerations “placing FTX prospects’ funds in danger.” Assistant U.S. Lawyer Danielle Sassoon referred to as the declare “obscure.”
Associated: FTX hacker strikes $120M amid Sam Bankman-Fried trial: Report
Ellison took the stand on the seventh day of SBF’s prison trial, which started on Oct. 3. She was one of many first FTX and Alameda insiders to plead responsible as a part of an settlement with U.S. authorities for her testimony.
Bankman-Fried has pleaded not responsible to seven prison prices in his first trial, anticipated to run via November. He’ll face an extra 5 counts in a March 2024 trial.
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