Mr. Bankman-Fried fell into the hands of Changpeng Zhao, the CEO of Binance, the only crypto exchange bigger than FTX. After reports surfaced that one of Mr. Bankman-Fried’s other businesses was on shaky financial ground, a Twitter post by Mr. Zhao, who is known online as CZ, effectively started a bank run that crippled FTX. On Tuesday, Binance announced that it had agreed in principle to buy its biggest competitor. “CZ executed a pinch move,” said Lee Reiners, a cryptocurrency expert who teaches at Duke University Law School. “He surprised us all.” Unlike some other crypto companies that have collapsed this year, FTX was almost mainstream. Mr. Bankman-Fried ran a commercial during the Super Bowl and bought the naming rights to the Miami Heat’s basketball arena. He has been profiled in nearly every major news outlet, including the Times, and has nearly a million followers on Twitter. “It’s like the person you thought was Hermione turned out to be Voldemort,” crypto journalist Laura Sheen tweeted on Wednesday. As the company collapsed, FTX’s venture capitalists were in the dark about Mr. Bankman-Fried’s plans, and employees had little guidance. Other companies distanced themselves. “There can be no ‘run to the bank’ on Coinbase,” wrote Alesia Haas, the chief financial officer of this US crypto exchange, in a blog post. “We hold client assets 1:1.” In a memo to Binance employees posted on Twitter, Mr. Zhao said the death of FTX “is not good for anyone in the industry.” “Regulators will scrutinize the exchanges even more,” he wrote. “Licenses around the world will be harder to come by.” This is a developing story. Check back for updates.
