Crypto Space Implodes After Shocking Revelations about FTX and its CEO, SBF
If you happened to be offline over the past few days, you may not have been privy to the absolute carnage that has been happening across the crypto space. Let me sum it up for you, with a bit of a backtrack into how and why it played out the way it did:
April 25th, 2022: Elon Musk receives a request from Morgan Stanley Banker, Michael Grimes, to have a chat with Sam Bankman-Fried (SBF) regarding a potential partnership in Twitter takeover. States he can bankroll $5B within the hour if the partnership goes ahead. Musk pretty much says 'hell no’, and later confirms in a tweet that he had a gut feeling that SBF’s supposed cash reserve was total BS. Source @TechEmails
September 21st: Binance and FTX in bidding war over Bankrupt Lender, Voyager, bail out; FTX wins, becoming another crypto “saviour”. SBF considered the “new J.P Morgan” and hailed as a genius.
November 2nd: CoinDesk publishes an exposé on SBF-aligned trading house, Alameda, that brings its solvency into question. Essentially, billions of dollars of collateral is kept as illiquid or locked FTT and other SBF-aligned tokens...curious, much?
November 7th: Binance begins liquidating its FTT holdings…others follow suit. Twitter back-and-forths explode. The bank run leads to more than $6B in withdrawals from FTX in only 24 hours, before they halt withdrawals. The plot thickens!
November 8th: In a strange turn of events, Binance announces potential acquisition of FTX, which appears unable to recover from the collapse of its own token, FTT, the billions of dollars worth of user withdrawals and an endless cascade of bad news.
November 9th: Binance CEO, Changpeng Zhao (CZ) shares in a tweet, his internal email to Binance staff, confirming why they are backing out of FTX takeover, citing the balance sheet had a hole of around $8B and the company had US investigations pending (I know, right?!).
The days that followed: KABOOOOOOM! Crypto dies, again 😱🤯😭☠️
November 11th: FTX tanks, SBF resigns, John J Ray III takes over as CEO, in charge of liquidation.
It seems that FTX was using customer funds, which they claimed were backed 1:1 (🤮) to make loans to Alameda, in order to allow Alameda to trade. This beefed up calls in the industry for proof-of-reserve (PoR) attestations. On Tuesday, Binance’s CZ committed the firm to PoR, and within 24 hours, almost everyone else does the same….except perhaps Crypto.com, who may have been part of a bogus coverup….read on 👇🏽
Hacked? Moving funds on purpose? The plot thickens….
FTX had funds moving quickly, hundreds of millions, even billions throughout this epic fiasco. They also claimed they’d been hacked out of several hundred million in crypto. Full story of that saga is over at CoinTelegraph. But what followed the collapse was even weirder.
According to Gate.io, their PoR audit happened before 320,000 ETH was “mistakenly” sent to their account by Crypto.com (say whaaaaat???). The damage may already have been done to Crypto.com though, as the Twitterverse continues to ramp up FUD in the moment, encouraging users to withdraw all assets from the platform, just in case.
Gate.io seems to have come out on top, having proven their reserves correct and boasting to hold over 100% of user asset reserves for BTC and ETH, after independent auditor, Armanino, publishes report.
Centralised Banking, Centralised Crypto…Both Have Serious Problems
Either way, it’s completely clear that the flush out of the 2022 bear market is gonna lay some strong foundations for the years to come. No more, crypto billionaires playing God with customer assets. No more lining the pockets of politicians, bankers and people of supposed influence (hello, WEF) without consequence and no more lies about your books. This is where decentralisation and the people’s money will grow in strength. Michael Saylor was right: “Around the world, banks are failing and currencies are collapsing. #Bitcoin offers hope to people that would otherwise have no escape from economic misery.”