CZ, meanwhile, was facing negative stories in the press about the Justice Department probe into Binace. I’ve worked for years as an investigative reporter, and coauthored the book Billion Dollar Whale, about the 1Malaysia Development Berhad scandal, and CZ wanted to know how to deal with the media.
I told him to just be transparent. But I had no answer to why some in the US media were lapping up Bankman-Fried’s every pronouncement.
“His media game is top-notch. I’ve not seen presidents, I’ve not seen politicians, I’ve not seen Mark Zuckerberg or Elon Musk getting those types of treatments. So whatever he did with the media, and to some extent with politicians, is just phenomenal,” CZ said.
At the start of his career in crypto, Bankman-Fried, famous for his baggy cargo shorts and untamed shock of hair, wanted to get to know CZ, a bespectacled, wiry Chinese Canadian 15 years his senior.
Like many in crypto, CZ wasn’t a revolutionary looking to democratize finance, but a Wall Street alumnus who had worked for Bloomberg Tradebook.
In 2017, CZ set up Binance, incorporated in the Cayman Islands, after a friend urged him to invest in Bitcoin, the first cryptocurrency. He admits he got lucky. Bitcoin’s price rallied, and Binance, which takes a cut of every transaction, made billions of dollars.
Bankman-Fried, meanwhile, took a job at Jane Street, a quantitative trading firm, after graduating from MIT. Many employees at Jane Street were adherents of “effective altruism,” a philosophy that encourages taking high-paying jobs and giving much of it away to charity. He’d made a good salary at Jane Street, and has said he donated more than half of it, but crypto offered even greater riches.
The fortunes being made in crypto, especially by CZ, were an inspiration. In 2017, Bankman-Fried quit Jane Street and set up Alameda Research, a crypto hedge fund, based in Berkeley. He quickly became a VIP trader on Binance, CZ says, and in 2019 Bankman-Fried organized a party at an aquarium in Singapore and invited CZ along.
A few months later, Bankman-Fried would start his own exchange, FTX, and, according to CZ, he asked Binance to become the first major investor. From the start, the relationship was competitive.
“They had a prototype written up in either Python or Node,” CZ says. “We were worried that the performance would not be good enough.”
CZ declined to invest. The snub irked Bankman-Fried, CZ remembers: “And so they went off on their own.”
But soon, FTX became popular, in large part because—like Binance—it allowed traders to make huge bets on crypto prices. Later that year, Bankman-Fried came back to CZ, who this time agreed to have Binance take what he says was a 20% stake in FTX, worth about $25 million, to help it expand.
“At the time, he was very humble,” CZ says.
By the time I met CZ in Sentosa, however, Bankman-Fried seemed to be turning on him. CZ had even heard he was telling regulators and the media that CZ was close to China’s government and not to be trusted.