Key Words: ‘The more damage you do now, the more jail time’: Binance’s Zhao warned FTX founder Sam Bankman-Fried in crypto group chat: report

by | Dec 9, 2022 | Stock Market

‘The more damage you do now, the more jail time.’ Binance founder Changpeng Zhao reportedly sent a flurry of concerned texts to FTX founder Sam Bankman-Fried the day before the now collapsed crypto exchange filed for bankruptcy, warning him that his trades could destabilize the industry. In a group chat with other cryptocurrency executives on Nov. 10, seen by the New York Times, Zhao warned Bankman-Fried that an FTX collapse could bring down the rest of the crypto industry, the newspaper reported on Friday.

“Stop now, don’t cause more damage”, he told the disgraced FTX founder, referring to trades FTX and its hedge fund offshoot Alameda were making, which had just caused customers seeking to redeem around $5 billion in deposits, which FTX didn’t have. Sam Bankman-Fried recently claimed to Bloomberg that he “misaccounted” the $8 billion hole in FTX’s balance sheet and the money was counted twice. “The more damage you do now, the more jail time,” Zhao told Bankman-Fried on encrypted messaging app Signal. Earlier that week, Zhao had agreed to buy FTX assets, before later backing out of the deal. The texts also show Zhao accusing Bankman-Fried of using his hedge fund to drive down the price of stablecoin Tether, which is pegged at $1. He said that Alameda made a $250,000 trade to destabilize Tether. Bankman-Fried responded with seeming confusion, “Huh? What am I doing to stablecoins?” “Are you claiming that you think that $250k of USDT
USDTUSD,

trading would depeg it?” he added. Zhao said while a $250,000 trade wouldn’t depeg the stablecoi …

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