Over the past few days, two of the biggest cryptocurrency trading platforms, Binance and FTX, have been in a conflict that has affected the entire market and its staunch holders.
Most market participants and watchers don’t know that this conflict dates back to 2019, but it’s only now that it’s really felt.
In the following lines, we will explain what happened, how it got here, and why it is an issue of high importance that should concern us all.
Binance and FTX: Emergence in the crypto market
Shortly after being founded by Changpeng Zhao in July 2017, Binance became one of the largest, most used, and most popular platforms for trading and holding cryptocurrencies worldwide. Many other platforms, such as Coinbase or BitMEX, tried to steal its crown, but their attempts were in vain.
However, a fierce competitor was created in May 2019 when Sam Bankman-Fried founded FTX. It was clear to the entire industry that the team behind this platform was on another level in every way, so FTX rose spectacularly to the top of the platforms quickly.
Changpeng Zhao’s platform did not reach the top by luck or speculation. CZ Zhao is a highly skilled developer and an intelligent leader who has only made the right moves all these years. Also, based on his sharp skills, Zhao decided to invest in FTX in 2019 when it launched.
How did the conflict between Binance and FTX start?
As FTX continued to expand rapidly throughout the last Bull Market, CZ Zhao sensed a threat from the American platform. For this reason, in 2021, Binance decided to relinquish the role of investor in a $900 million fundraising round maintained by FTX. At the time, CZ Zhao said the move was part of their investment cycle, but now we know better how it went.
Fast forward to 2022, and FTX is now second in the top trading platforms, with Binance in first place. Even though Binance remained the leader with at least triple the trading volume, the rise of FTX started to alarm CZ Zhao. However, there were other reasons why Zhao was worried…
![Simply Explained: The Conflict Between Binance and FTX (Part One) 7 The Conflict Between FTX and Binance](https://crypto.ro/en/wp-content/uploads/2022/11/ftxbinance1.jpeg)
It was no secret that Sam Bankman-Fried was ambitious to rise to the top by winning ground with financial regulatory institutions (especially in the United States). Also public is that Bankman was one of the biggest donors to the American political sectors (the second biggest donor to Joe Biden’s campaign).
Sam Bankman’s tactic to push FTX over Binance
Sam Bankman understood from the beginning that he had to use US regulatory policies to defeat Binance. This was also clear to CZ Zhao: because he was born in China, there was speculation on the internet about the involvement of the Chinese government in Binance. Because of this, tension arose in the crypto space between the United States and China, and Sam Bankman took advantage of this opportunity.
Changpeng Zhao decided not to give up without a fight, and recently an opportunity arose for him to strike back. Two major events, in particular, gave the Binance boss a chance to attack FTX:
- After FTX published the proposals for regulating the crypto space, it was easy to see that Sam Bankman was trying to kill the DeFi space to capture it through regulation. Suddenly, Bankman became an enemy of the crypto space.
- When CoinDesk posted an article stating that the vast majority of funds ($14.6 billion) held by Alameda Research, the investment arm of FTX, are held in FTT (FTX Token). This meant that if the price of FTT were to drop significantly, FTX would be in a precarious position.