The downfall of Sam Bankman-Fried and his $32 billion cryptocurrency empire was caused by a single tweet from rival Changpeng Zhao, which caused a massive flood of withdrawals from FTX by customers who lost everything

The downfall of Sam Bankman-Fried and his multi-billion dollar crypto companies may have been caused by a single tweet from his industry rival.

Just days before the collapse of FTX and its sister company, Alameda Research, the head of rival Binance, Changpeng Zhao, announced that his company would divest Bankman-Fried’s business.

He made the announcement on Twitter, citing “recent revelations” about FTX’s health. These revelations were detailed in an Alameda balance sheet leaked days earlier that showed the financial mess that Bankman-Fried’s companies were in.

Zhao said Binance would liquidate its FTT tokens. FTT is a cryptocurrency issued by FTX – and Binance’s decision to sell its stake caused widespread panic among users of Bankman-Fried’s platform.

Binance’s announcement caused a run on the bank at FTX, but the company did not have enough money to pay investors who wanted to withdraw their assets. Customers attempted to withdraw $6 billion within 72 hours.

The crisis ultimately exposed FTX’s fraudulent practices – and Bankman-Fried was charged with bank fraud on December 2, less than a month after Zhao’s tweet.

Zhao had tweeted on November 6, “As part of Binance’s exit from FTX stock last year, Binance received approximately $2.1 billion USD equivalent in cash (BUSD and FTT). As a result of recent revelations that have come to light, we have decided to liquidate the remaining FTT on our books.”

In three follow-up tweets, he said Binance would attempt to sell its shares “in a way that minimizes impact on the market” and that the process would “take a few months.”

Within days, the crypto markets had collapsed as investors sold their stocks en masse due to the failure of the FTX.

Zhao also immediately sought to dispel the theory that it was a concerted effort to hurt a rival company, adding: ‘Binance always encourages cooperation between industry players. As for any speculation as to whether this is an action against a competitor, it is not. Our industry is still in its infancy and every time a project publicly fails, it hurts every user and every platform.”

A few weeks later, he also noted in another tweet that “no healthy company can be destroyed by a tweet.” Zhao followed this up with the accusation that Bankman-Fried is “one of the biggest fraudsters in history.”

Prosecutors allege that Bankman-Fried knowingly stole money from customers of his FTX platform.

“This is not about complex issues surrounding cryptocurrencies,” prosecutor Nicolas Roos told the jury on Wednesday, after several days of withering cross-examination of the fallen crypto king.

‘It’s about deception. It’s about lies. It’s about stealing. It’s about greed,” he said of the 31-year-old who was worth an estimated $26 billion at the height of his fame. FTX was valued at $32 billion at its peak.

Bankman-Fried was on trial in New York for siphoning off funds invested by unwitting customers on his FTX cryptocurrency exchange platform, once the second-largest exchange for crypto investors.

He was found guilty Thursday evening after less than five hours of deliberation and now faces a maximum prison sentence of 115 years.

Up to $14 billion in client money fueled the trades and venture investments of Alameda Research, Bankman-Fried’s personal hedge fund.

The jury is confronted with the question of whether “the suspect knew that taking the money was wrong,” Roos said.

‘He knew it was wrong. He did it anyway (and) thought that because he was smart he could get away with it,” the prosecutor argued.

To believe otherwise, “you would have to believe that the defendant actually had no idea. You have been through this process and you know that none of it is true.”

The 31-year-old, already weakened during the first three weeks of the trial, did not change matters during his several days of testimony.

“He lied to you,” the prosecutor said of Bankman-Fried’s repeated attempts to say he was unaware of Alameda’s dire situation or to recall false statements that all was well at his company.

But in the two hours after closing arguments, prosecutors said Bankman-Fried had received multiple warnings about Alameda’s finances well before its collapse late last year.

“Every time he chose to double down, to dig the hole deeper,” Roos told the jury.

During the trial that began on October 3, the Massachusetts Institute of Technology graduate admitted that he had made “mistakes” in managing his crypto empire, but that he had never committed fraud.

He portrayed himself as a young entrepreneur, swamped with work, who only became aware of Alameda’s problems when it was too late.

He said the problems at Alameda arose because his directions were ignored by staff, including his ex-girlfriend Caroline Ellison, whom he chose to run Alameda.

The lawsuit found that Alameda was allowed to borrow up to $65 billion from FTX through a software “backdoor,” using the money for risky investments, political donations and the purchase of posh real estate.

But the blank check turned sour when the cryptocurrency industry succumbed to a series of defaults in 2022, sending the value of virtually all digital currencies and Alameda’s assets plummeting.

According to prosecutors, at the time of FTX’s bankruptcy, just over $8 billion disappeared from customers in bad investments at Alameda.

Bankman-Fried’s attorney told jurors Wednesday that prosecutors in his fraud trial tried to portray him as a “bad guy” and a “monster” because they couldn’t prove he stole billions of dollars from the cryptocurrency’s customers -exchange.

Attorney Mark Cohen began his closing arguments in Bankman-Fried’s trial in Manhattan federal court after the prosecutor presented his arguments to the 12 jurors for sentencing.

Cohen said prosecutors had solicited testimony about Bankman-Fried’s sex life and appearance – the former billionaire was known for his unkempt curly locks and wearing shorts and T-shirts – to try to make the jury dislike him .

“Every movie needs a villain,” Cohen said. “And let’s be honest: A clumsy high school math nerd doesn’t look exactly mean. So what did they do? They wrote him as a villain in the movie.”

“Time and time again, the government has tried to turn Sam into some kind of villain, some kind of monster,” Cohen added.