The Block: SBF spread rumors about Binance's CZ, according to Patrick Hillman

Samuel Bankman-Fried repeatedly spread false or racist rumors about Binance CEO Changpeng Zhao before the collapse of Bankman-Fried’s crypto exchange FTX, according to Binance Chief Strategy Officer Patrick Hillman.

“Sam was CONSTANTLY spreading fake rumors about @cz_binance , because shading him as an ‘evil Chinese’ was critical to his scam. You can't pretend to be Luke Skywalker without Darth Vader,” Hillman tweeted late in the evening of April 20 .

Hillman was referring to a new account of the demise of FTX published in Puck magazine, written from the perspective of Anthony Scaramucci of the hedge fund Skybridge Capital. The story describes how SBF bought a $45 million ownership stake in Skybridge, and how Scaramucci then invested $10 million of that in FTT, the bankrupt exchange's native token. The collapse of FTX in November rendered that investment almost worthless.

During those talks — and their joint trips to the Middle East seeking investments in Dubai — SBF was “bad-mouthing” CZ, Puck reported :

During SBF’s meetings with officials in Dubai, he had been bad-mouthing Changpeng “CZ” Zhao , the founder of Binance and SBF’s rival crypto mogul. The Mooch had not been involved in those meetings, but his Skybridge colleague had been there and reported the bad form back to him.

This behavior seemed worrisome. After all, The Mooch had come of age professionally at Goldman Sachs, where corporate politesse is the coin of the realm, partly out of practicality: life is long and unpredictable and colleagues can become competitors and then clients. Also, people talk. “He was lighting CZ up,” The Mooch continued. “And these are small towns. They look glitzy from a travel brochure, but trust me, these are small, very connected, interconnected towns. It got back to CZ” As also recounted previously, SBF’s denigration of CZ led the latter to suggest publicly that he might consider selling his $500 million investment in FTT tokens.

The Block contacted SBF’s lawyers for comment but we did not immediately hear back.

SBF's rivalry with CZ SBF and CZ have long had a personal rivalry. At one point, when FTX was in trouble but still operating, Binance offered to rescue FTX in a $1 billion buyout. But Binance backed out of the deal a day later after doing due diligence on the company. “ The issues are beyond our control or ability to help,” Binance said at the time.

FTX filed for bankruptcy hours later.

Patrick Hillman's tweet about SBF and CZ. Source: Twitter.

Prior to that, CZ accused SBF in a Signal group chat of trying to “depeg” tether , a stablecoin also known as USDT whose value is tied to the U.S. dollar, according to the Wall Street Journal.

CZ made the accusation on Nov. 10, after pulling out of the FTX rescue. “Stop trying to depeg stablecoins. And stop doing anything. Stop now, don’t cause more damage,” CZ told SBF, according to the Journal.

FTX's sister hedge fund, Alameda Research, had in fact recently sold $250,000 of tether. The sum was too small on its own to devalue USDT below its $1 peg. But the trade might have been enough to sow fear in the market if trading was thin.

CZ's advice for SBF “My honest advice: stop doing everything. Put on a suit, and go back to DC, and start to answer questions,” CZ reportedly told SBF.

SBF denied he was trying to depeg tether.

“Thanks for the advice!” He said on Signal, per the Journal. “Did you attempt to accuse me of trying to depeg a stablecoin by doing a $250,000 trade?”

Hillman also denied on Twitter that the animosity between SBF and CZ caused Binance to back out of the rescue deal or jettison its holdings of FTT. “Sam denigrating CZ was the norm for us,” he said. “Had nothing to do with deciding to sell the worthless FTT on the company's books.”

Patrick Hillman says SBF's gossip was "the norm." Source: Twitter.

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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