FTX. You In?
A deleted Tweet, a Harry Potter fan, and Tom Brady. A perfect combination for the biggest flop ever in the crypto market.
In one week, FTX has gone from being the world’s largest and most important crypto trading exchange to the latest massive failure in a volatile and unregulated industry.
There’s lots of details in the postmortem of FTX’s fall from grace. But everyone agrees that it started because of the on again, off again bromance between the CEO/Founder of Binance, CZ (Changpeng Zhao) and the CEO/Founder of FTX, SBF (Samuel Bankman-Fried).
And everything began to truly unravel with a since deleted Tweet.
As SBF pushed for more regulation in the cryptocurrency industry, it put a target on his back by many in the crypto sector. SBF was also one of the largest donors to the presidential campaign of Joe Biden.
At the same time, SBF loaned Alameda Research, run by his reported girlfriend Caroline Ellison, billions of dollars from his FTX platform, including more than $8 billion in customer funds.
Then on October 29th, a tweet, which called into question Binance and CZ’s relations with China, pushed Binance to sell over $2 billion FTT stake as part of its “post-exit risk management”. CZ and Binance knew the price of the FTX token was linked to FTX’s investing arm.
The tweet has since been deleted.
But the damage had already been done.
Also, a report by CoinDesk exploring Alameda’s balance sheet revealed that it relies heavily on holdings of the FTX Token. More exactly, of the $14.6 billion in assets Alameda manages, almost $6 billion is FTT or FTT collateral.
Then that exposed the funds that were being raked over from FTX’s customers to Alameda Research to do whatever they wanted. This allowed Alameda to pursue aggressive investment strategies without the go-ahead from the investors that gave them their money.
The now-former CEO of Alameda Research, Caroline Ellison, and SBF’s girlfriend, is only 28-years-old. She was persuaded by SBF to join Alameda Research after working alongside him for 19 months at Jane Street right out of Stanford University. When Ellison arrived at Alameda Research, the 28-year-old found out quickly she had more trading experience than most of the employees there and rose to CEO quickly. On an earlier FTX branded podcast, Ellison says she was “kind of thrown into” making decisions at Alameda. Ellison found herself making “a bunch of decisions,” a lot of which were “really uncertain,” and that this was “terrifying.”
Ellison hadn’t even wanted to be a trader. She was a diehard mathematician and Harry Potter fan who was a child of two economists. Ellison got into trading because she “just didn’t really know what to do” with her life.
SBF confessed Alameda was being funded by money customers who had deposited in FTX for their own trading purposes.
SBF announced that he is shutting down Alameda Research, the trading house at the heart of his digital-asset empire, as he seeks last-ditch financing to save his troubled crypto exchange FTX.com.
Roughly 20,000 bitcoin have been pulled from the crypto exchange just in the past 24 hours and left FTX with one, single BTC.
Binance offered to be a savior and purchase FTX. However, the frenemy announced Wednesday it would not go ahead with a purchase of FTX after doing “due diligence”.
The 30-year-old SBF — who has more than $10 billion tied up in FTX and crypto research firm Alameda — saw his name wiped from the Bloomberg Billionaires Index, meaning the vast majority of his wealth has evaporated.
Miami Heat announced it terminated its relationship with FTX and is searching for a new arena partner.
FTX bankruptcy filing shows the company had 134 affiliates across the globe with liabilities from $10 billion to $50 billion. Enron, one of the biggest corporate collapses ever, only had liabilities of $23 billion.
The cryptocurrency exchange FTX owes creditors $3.1 billion,
Tom Brady who was featured in advertisements promoting the company appeared in commercials alongside his soon-to-be ex-wife, Gisele Bundchen, is set to lose millions. Once again, it’s unclear how much the couple invested. Brady is worth an estimated $250 million. Bundchen’s net worth has been estimated at $400 million.As the commercial showed Tom Brady calling his friends, and their friends calling their friends to ask, “You in?”
Right now, three former FTX executives, SBF, as well as Alameda Research CEO Caroline Ellison, while “under supervision” in the Bahamas, are looking for ways to flee to Dubai. The group assumed that the United States “doesn’t have any extradition treaties” with the UAE, however, the nations signed a mutual legal assistance treaty (MLAT) back on Feb. 24, 2022.
Apparently, the commercial for FTX would be shot differently after the events of this week. Friends and family would be calling each other frantically no longer asking the question, “You in?” They would simply be yelling into the phone, “Get out!”
