Changpeng Zhao’s Twitter ‘contributed’ to FTX’s downfall, says Carolyn Ellison.
According to former Alameda Research CEO Caroline Ellison, a tweet from Binance CEO Changpeng “CZ” Zhao contributed to the fall of cryptocurrency exchange FTX.
Testifying at the October 12 criminal trial of Sam “SBF” Bankman-Fried, Ellison reportedly placed some of the blame on CZ's social media activity for FTX's downfall. In the year In a now-famous tweet on X (formerly Twitter) from November 6, 2022, CZ announced that Binance would liquidate its holdings of FTX Token (FTT) “due to recent disclosures.
As part of Binance's equity exit from FTX last year, Binance received approximately $2.1 billion in cash (BUSD and FTT). Due to recent revelations, we have decided to delete the remaining FTT on our books. 1/4
— CZ Binance (@cz_binance) November 6, 2022
According to multiple reports, the token's demise has led retail investors to follow Binance's example and withdraw funds from FTX. The run on the platform caused FTX to stop withdrawing funds and file for bankruptcy on November 11.
According to Ellison, the tweet “contributed” to FTX's collapse, but the main reason was that Alameda “couldn't repay” a $10 billion loan from the currency. Banman-Fried took the stand at the SBF hearing on October 10 that Alameda ordered her to withdraw billions of dollars from FTX without user consent.
One of CZ's tweets on the Dec. 6 thread countered the “destroy FTX” comment, saying, “A healthy business can't be destroyed on Twitter.” Alameda pointed to Ellison's own social media activity since Nov. 6, saying the offer to buy Binance's FTT holdings “was a real reason for people to dump the tokens.”
4. “CZ Twitter FTX Destroyer”
No healthy business can survive on Twitter.
However, there was a tweet that might have, Carolyn's tweet 16 minutes after mine on Nov 6. The data shows that it was the real reason people dropped FTT: https://t.co/yWFqKvbqMU
— CZ Binance (@cz_binance) December 6, 2022
Information provided at trial by a former Alameda CEO alleges Bankman-Fried's interest in becoming the president of the United States, creating several “alternative” Alameda financial spreadsheets for Genesis and SBF, Saudi Crown Prince Mohammed bin Salman. Supporter of the exchange. Testimony by defense counsel Mark Cohen appeared to focus on Banman-Fried's knowledge of the Alameda operations.
“She might have said that,” Ellison said when asked by Cohen. [SBF] Perhaps because she was unaware of the risk of “putting FTX customers' money at risk”. U.S. Attorney Danielle Sassoon called the claim “vague.”
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Ellison took the stand on the seventh day of the SBF's criminal trial, which began on October 3. She was one of the first FTX and Alameda associates to plead guilty in a deal with US authorities for her testimony.
Bankman-Fried has pleaded not guilty to seven felony charges in his initial trial, which is set for November. He faces five more charges in March 2024.
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