Inside the frantic texts exchanged by crypto executives as FTX collapsed
The day before the embattled cryptocurrency exchange FTX filed for bankruptcy, Changpeng Zhao, the chief executive of the rival exchange Binance, sent an alarmed text to Sam Bankman-Fried, FTX’s founder.
Zhao was concerned that Bankman-Fried was orchestrating crypto trades that could send the industry into a meltdown. “Stop now, don’t cause more damage,” Zhao wrote in a group chat with Bankman-Fried and other crypto executives Nov. 10. “The more damage you do now, the more jail time.”
FTX and its sister hedge fund, Alameda Research, had just collapsed after a run on deposits exposed an $8 billion hole in the exchange’s accounts. The implosion unleashed a crypto crisis, as firms with ties to FTX teetered on the brink of bankruptcy, calling the future of the entire industry into question.
The series of about a dozen group texts between Zhao and Bankman-Fried on Nov. 10, which were obtained by The New York Times, show that key crypto leaders feared that the situation could get even worse. Their frantic communications offer a glimpse into how business is conducted behind the scenes in the industry, with at least three top officials from rival companies exchanging messages in a group on the encrypted messaging app Signal.
The texts also show that industry leaders were acutely aware that the actions of a single firm or fluctuations in the value of one virtual currency could destabilize the whole industry. The exchanges became increasingly tense as Bankman-Fried and Zhao traded barbs.
Earlier that week, Zhao had agreed to buy FTX and save the exchange, before backing out of the deal. In the Nov. 10 texts, he appeared certain that FTX would not survive, and concerned that it could bring the rest of the industry down with it. During a
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