Omid Malekan, an author and adjunct professor at Columbia Business School, said in a Nov. 22 post on X that a key difference between the crypto exchanges FTX and Binance is that Binance did not misuse its customer funds. This statement comes in the wake of recent legal actions against both crypto exchanges. Malekan noted that Sam Bankman-Fried, the founder and former CEO of FTX, was "beloved" by many government officials.
"Unlike FTX—a company whose psychopathic leader was beloved by half the people in that press conference not that long ago—Binance didn’t abscond with user money," said Malekan.
Binance reached a settlement with the U.S. Department of Justice (DOJ) on Nov. 21 over historical compliance issues, according to a press release. As part of the resolution, Binance agreed to pay $4.3 billion in penalties and will allow a third-party monitor to have access to its transactions and accounts. Changpeng Zhao (CZ), the founder and former CEO of Binance, agreed to step down from his role as CEO and plead guilty to failing to maintain an effective anti-money laundering (AML) program.
A jury found FTX’s Bankman-Fried guilty on Nov. 2 of seven criminal charges, including wire fraud, conspiracy to commit wire fraud, and money laundering, The Block reported.
U.S. Attorney Damian Willaims has called Bankman-Fried one of the biggest financial scammers in U.S. history who perpetrated "a multibillion-dollar scheme designed to make him the king of crypto," CoinTelegraph reported.
Bankman-Fried had risen to celebrity status, living in a $35 million penthouse before his crypto company collapsed in November 2022, NPR reported. FTX customers started withdrawing their funds in November after seeing red flags about the financial health of the exchange, leading to an effective bank run that revealed FTX was not holding customers' money in full. FTX and its associated hedge fund Alameda Research filed for bankruptcy on Nov. 11, 2022, and Bankman-Fried was extradited from the Bahamas one month later.
Congressman Tom Emmer spoke about Bankman-Fried’s relationship with U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler on a Nov. 22 episode of the Thinking Crypto podcast. During the podcast interview, Emmer said Gensler "was more interested, in my opinion, in doing a backroom deal to give FTX an inside track to being a crypto exchange in the United States before he realized - or maybe he should’ve known already - that it was a corrupt business, as old as finance itself: a centralized control operation. It was basically a Ponzi scheme that they were running."
Malekan is the author of several books, including The Story of the Blockchain: A Beginner’s Guide to the Technology That Nobody Understands, according to the Columbia Business School website. He teaches an introductory course to blockchain and cryptocurrency at Columbia, and his writing has been featured in publications including the New York Times and the Wall Street Journal.
