Inside the Collapse: Changpeng Zhao Recounts FTX’s Final Hours in New Memoir
Binance founder Changpeng Zhao’s new memoir reveals the surreal, casual nature of SBF’s bailout requests and identifies specific tactical blunders that accelerated the collapse of FTX.
A Casual Request for Billions
The implosion of FTX in November 2022 remains the defining cautionary tale of the crypto era, and a new memoir from Binance founder Changpeng Zhao (CZ) provides a chilling, granular look at the exchange’s final, frantic moments. In his recently released book, 'The Power of Choice,' Zhao recounts the surreal nature of his interactions with Sam Bankman-Fried (SBF) as the liquidity crisis reached its zenith.
According to Zhao, the request for a multi-billion dollar bailout was delivered with startling nonchalance. He describes SBF’s plea for capital as being as casual as asking for a “Bologna sandwich.” This disconnect between the gravity of the situation—the evaporation of billions in customer funds—and the tone of the negotiations serves as a stark illustration of the hubris that characterized the collapse of the former multi-billion-dollar exchange.
The Letter of Intent: A Tactical Formality
One of the most significant revelations in the memoir concerns the now-infamous non-binding letter of intent (LOI) signed by Binance to acquire FTX. At the time, the market viewed the document as a genuine lifeline that might stave off a total contagion event. Zhao, however, characterizes the signature as little more than a formality.
For market participants, this detail is critical. It suggests that even in the heat of the moment, the largest player in the industry recognized the fundamental insolvency of its rival almost immediately. By treating the LOI as a procedural necessity rather than a strategic commitment, Zhao highlights the speed at which the institutional assessment of FTX shifted from 'troubled' to 'unrecoverable.'
The Ellison Factor: A Fatal Miscalculation
Zhao reserves particular scrutiny for Caroline Ellison, the former CEO of Alameda Research, FTX’s sister trading firm. As the balance sheets were being scrutinized, Ellison allegedly made an offer to sell FTT tokens at a floor price of $22. Zhao identifies this specific proposal as a “fatal mistake” in the negotiation process.
For professional traders, this admission underscores the role of market mechanics in the collapse. The attempt to anchor the price of FTT—an illiquid, centralized asset—at a specific level during a bank run was a tactical blunder that likely accelerated the loss of confidence among FTX’s remaining creditors and investors. By setting a price floor that the market clearly did not support, the leadership at FTX inadvertently signaled their desperation and lack of understanding regarding the depth of the liquidity hole.
Market Implications and the Legacy of FTX
The collapse of FTX sent shockwaves through the digital asset markets, leading to a prolonged period of deleveraging and a significant tightening of regulatory oversight globally. For institutional investors, the primary takeaway from Zhao’s account is the fragility of centralized exchanges that operate without transparent, verifiable proof of reserves.
Traders should view these revelations as a reminder of the 'counterparty risk' that remains a central theme in crypto-asset management. The ease with which billions were requested, combined with the misreading of market signals by FTX leadership, highlights the necessity for rigorous due diligence that extends beyond public valuations or high-profile marketing campaigns.
Looking Ahead: Regulatory Scrutiny
As the industry continues to mature, the disclosures in Zhao’s memoir will likely serve as historical documentation for ongoing regulatory debates regarding exchange transparency and consumer protection. Investors should watch for continued shifts in how centralized exchanges are audited and the increasing preference for self-custody or decentralized finance (DeFi) solutions that mitigate the risks of human error and mismanagement evidenced in the FTX saga.
While the legal chapters of the FTX story have largely closed with the sentencing of its key players, the narrative provided by Zhao serves as a final, sobering post-mortem for those looking to understand how the architecture of a global exchange can erode almost overnight.