The day CZ missed the best investment of his life, Crypto missed out on AI

Original | Odaily Planet Daily Azuma

In 2014, just one year after being introduced to the concept of cryptocurrency, CZ made the most daring investment of his life ------ he sold his apartment in Shanghai and "went all in" with about 1,500 BTC at a three-digit price. Twelve years later, had CZ never sold, this investment could have brought in over a hundred million dollars in profit (with a peak return of about $189 million).

Compared to his subsequent achievement of founding Binance and becoming an industry leader, the returns from this investment are now trivial for CZ. However, from an external perspective, this idealistic "all-in" move remains one of CZ's most talked-about actions.

Ironically, even the resolute and decisive CZ once dramatically missed out on a potential profit that was a hundred times greater than "selling a house to buy coins."

Rewind the clock 1,188 days: That ill-fated acquisition

November 9, 2022, was a sleepless night for the cryptocurrency industry.

Just the day before, the once-prominent FTX had suspended withdrawals due to a liquidity crisis, and panic quickly escalated in the community, with the stench of impending disaster beginning to permeate the market… The story that followed is well-known; FTX collapsed, triggering a domino effect that led to a prolonged winter for the market lasting several years.

In a parallel universe, the story could have taken a different turn. In the early hours of November 9, SBF and CZ both released statements claiming that FTX had reached a preliminary acquisition agreement with Binance.

SBF: Hello everyone. I have some news to announce. We are back to square one; the first and last investors of FTX are the same group of people ------ we have reached a strategic transaction agreement with Binance (pending due diligence).

CZ: This afternoon, FTX sought our help. The exchange is currently facing severe liquidity issues. To protect users, we signed a non-binding letter of intent to fully acquire FTX to alleviate the liquidity crisis. We will conduct a comprehensive due diligence in the coming days.

However, the acquisition ultimately did not materialize. Just one day later, Binance officially announced that it was abandoning the acquisition, citing "issues beyond our control," which became the last straw that broke FTX's back.

Did CZ genuinely consider acquiring FTX? Was the hasty conclusion of the acquisition a genuine attempt to assist, or merely a way to gauge the competitor's "health"? This may remain an eternal mystery. In hindsight, CZ personally defeated the largest competitor at the time, solidifying Binance's position as the industry leader.

But no one expected that a seemingly insignificant "idle piece" in FTX's asset pool would rapidly appreciate in value over the next few years, now worth far more than the total remaining assets from that unfinished acquisition.

Once an "idle piece," now the focus of AI

In April 2022 (this is the official announcement date; the transaction was actually completed in 2021), FTX made its most significant investment in the AI field ------ leading a $580 million Series B financing round for AI startup Anthropic with a $500 million investment, at one point holding a 13.56% equity stake, which later diluted to 7.84% as Anthropic completed multiple financing rounds.

That was an era before the imagination of AI had exploded. Just six months later (at the end of November 2022, the same month FTX collapsed), OpenAI's ChatGPT burst onto the scene, marking the irreversible entry of the world into the "Age of AI," while Anthropic, with its Claude series products (especially the programming-oriented Claude Code), repeatedly astonished the world, gradually becoming one of the brightest star companies of the AI era.

As Claude continued to iterate, Anthropic's valuation also kept rising. Investors were frantically waving their cash, eager to board the ship heading towards Anthropic's IPO. The latest market rumors suggest that Anthropic is entering the final stage of a new large-scale financing round, with the financing amount expected to exceed $20 billion (originally planned to raise $10 billion, but due to investor demand far exceeding expectations, the final amount is likely to double), with a valuation potentially reaching $350 billion, and the transaction could be completed as early as this week.

Based on the latest valuation of $350 billion, the equity stake FTX held in Anthropic is now worth approximately $27.44 billion, enough to cover the reserve shortfall that led to its bankruptcy multiple times… but history has already occurred, and the outcome is set.

It's hard not to marvel at SBF as a rare venture capital genius (besides Anthropic, he also invested in the now-popular Cursor during its seed round), but clearly, he was not a competent business operator, especially lacking in risk control. CZ's profile, on the other hand, is entirely different; he is an exceptional operator, and Binance's dominance is inseparable from his multiple correct strategic decisions. However, CZ often claims he is not a traditional investor purely seeking investment returns; he doesn't trade coins but aims to be a builder of the industry.

A hasty conclusion: This should have been the best intersection of Crypto and AI

You might be curious about what happened to those FTX equity stakes in the end.

The conclusion is not complicated. After FTX's bankruptcy, all assets, including the equity in Anthropic, were managed by the FTX bankruptcy administration team. In February 2024, the court approved the FTX bankruptcy administration team to sell these stakes; in March and June of the same year, the FTX bankruptcy administration team sold 29.5 million shares and 15 million shares for a total price of $884 million and $450 million, respectively, totaling over $1.3 billion.

As for the buyers of these stakes, they mainly came from Abu Dhabi's ATIC Third International Investment, as well as traditional financial institutions like Jane Street and Fidelity from Wall Street. In other words, no cryptocurrency companies benefited from this.

Whether these stakes were deliberately sold at a discount or if there was any interest transfer disguised as bankruptcy liquidation is no longer important for the crypto industry.

This should have been the best intersection of Crypto and AI. In another world line, whether these stakes were in SBF's or CZ's hands, if the leading companies in the crypto world could have had a say in the development of the most successful companies in the AI world, then there might have been more innovative attempts around Crypto + AI, leading to unexpected fruits.

It's not just CZ who is lamenting this.