Inside FTX’s Sam Bankman-Fried’s Telephone Name With Crypto Rival OKX

• In an interview with Insider, the director of monetary markets for OKX recounted two telephone calls he had with Sam Bankman-Fried earlier than FTX collapsed.
• Bankman-Fried initially requested for $1 billion to $2 billion from OKX, however known as again hours later asking for extra.
• The exec suggested Bankman-Fried to seek the advice of the CEO of Binance relating to the liquidity of FTX’s native token, FTT.

As specifics about FTX’s collapse proceed to floor by way of courtroom filings and tweetstorms, so too are particulars about Sam Bankman-Fried’s scramble for a rescue within the days main as much as his agency’s November 11 bankruptcy announcement. 

On November 6, Binance CEO Changpeng “CZ” Zhao tweeted that Binance was liquidating $531 million of FTX’s native token FTT, triggering a liquidity disaster at Bankman-Fried’s agency. To avoid wasting FTX, Bankman-Fried sought emergency capital from rival crypto exchanges, together with OKX, which says it is the second-largest crypto exchange by spot buying and selling quantity. 

On November 8, Lennix Lai, director of monetary markets for OKX, received two telephone calls from Bankman-Fried.

“The very first name that we acquired from Sam he stated every little thing’s beneath management, however they may want money, one to 2 billion {dollars} max in short-term credit score, in alternate for FTT worth or fairness in FTX,” Lai informed Insider in an interview.

He did not reject the request, and stated he was prepared to assist. However the telephone name was late at evening as Lai was in Southeast Asia, so he deliberate to fall asleep earlier than reviewing the main points along with his workforce at OKX. 

The truth is, he thought he may take a number of days to go over choices, and recalled that Bankman-Fried sounded calm whereas admitting the scenario was his fault. In an optimum situation, OKX would’ve created a strategic partnership with FTX, Lai defined, because it strengthens the business if huge gamers may help each other.

However a pair hours later Bankman-Fried known as again with way more nervousness in his voice. 

“He talked about they have been in a really vital scenario, and solely received just a few hours,” Lai stated. “We did not know what that meant. Additionally, they have been speaking about much more billions [of dollars], in order that was tough for us.”

He nonetheless did not flip down the 30-year-old FTX founder, however he could not instantly conform to a billion-dollar lifeline on the spot and knew {that a} bailout could not occur with out assist from Binance’s Zhao.

Lai acknowledged that one of many core points was FTX’s reliance on FTT, so he suggested Bankman-Fried to seek the advice of with Zhao on an effort to stabilize the token. Rebuilding confidence in FTT may purchase the alternate some extra time to safe a rescue, he added. 

Hours later, Binance agreed to acquire FTX. However that deal fell by way of the subsequent day, and FTX imploded in brief order.

Better transparency for crypto

Within the coming months, Lai expects extra crypto exchanges to stick to better transparency. Like different opponents, OKX already is going through extra scrutiny from regulators, he stated, however the firm is attempting to take a proactive position. 

OKX was the primary alternate to announce it should present proof of reserves by a third-party audit, in line with Lai. 

In the meantime, the market will take time to quiet down, however finally the sector’s Lehman Brothers moment will go away crypto higher off. 

“It is good for the business, in the best way that some exchanges will begin cleansing up their mess, good by way of transparency, stability,” he stated. “I do know the area goes to be extra clear.”