The revelations are linked, while the ex-CEO of FTX Sam Bankman-Fried has just been arrested in the Bahamas, by order of the American justice. The Wall Street Journal claims to have become aware of a secret Signal group bringing together the CEOs of major exchange platforms. An assertion denied by Jesse Powell, the co-founder of Kraken. Who to believe?
Changpeng Zhao reportedly urged Sam Bankman-Fried to ‘stop everything’ amid FTX crash
According to messages consulted by our colleagues from the Wall Street Journal, there is a private Signal conversation, which brings together the CEOs of the major cryptocurrency exchange platforms. And this one would have been active during the fall of FTX, at the beginning of last month. The conversation, called “Exchange coordination” would have allowed Changpeng Zhao to issue a warning to Sam Bankman-Fried November 10:
“Stop trying to depeg stablecoins. And stop doing anything. Stop now, don’t do any more damage.»
Urgency of Changpeng Zhao’s request would show Binance CEO genuinely feared for the financial stability of the ecosystem, which is largely based on stablecoins. The transactions made by Alameda Research would indeed have caused Zhao, and presumably other participants, to fear a collapse of Tether’s USDT.
Among the other members of this secret signal group, one would find precisely the CTO of Tether, Paolo Ardoino, but also Justin Sun (Tron) and Jesse Powell, the co-founder of the Kraken exchange platform. It will be recalled that at the time the exchange took place, the USDT had briefly fallen, which had created a wave of panic within the ecosystem.
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Jesse Powell denies the existence of this group
Jesse Powell reacted to the article, calling it “fake news.” He asserts that such a discussion does not exist, without it being known whether he is referring to the group, or the part quoted by the Wall Street Journal:
fake news. Doubt this chat ever happened. I certainly wasn’t in the room. Likely, someone trolling the MSM. The Tether story doesn’t even make sense. The story here is that WSJ & NYT were easily duped in to writing a made up story about nothing.
— Jesse Powell (@jespow) December 11, 2022
“fake news. I have my doubts that this conversation actually happened. I was definitely not in the room.»
As for Sam Bankman-Fried, he did not deny the existence of this group, but affirmed never wanted to influence stablecoin prices :
“These accusations are absurd. […] To my knowledge neither I nor Alameda have ever attempted to intentionally cause Tether, or any other stablecoin, to lose parity with the dollar. I’ve made a lot of mistakes over the past year, but not this one.»
An assertion which tends to be confirmed by the messages consulted by the Wall Street Journal, which reports that Sam Bankman-Fried reportedly responded to Changpeng Zhao’s accusations in the Signal group:
“Do you really think $250,000 USDT transaction could actually depeg it?»
Who to believe then? If this private conversation existed, the implications would of course go deeper than the FTX case. This coordination would be unthinkable in traditional finance, and could open the door to new questions in terms of competition and market monopoly.
👉 Also in the news – Sam Bankman-Fried has been arrested and should be extradited to the United States
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Source: Wall Street Journal – Image: FTX, Web Summit via Flickr (CC BY 2.0)
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