Hey everyone! It's Bralon here to update you all on all the recent seismic events in the cryptoverse.
Why Is Everything Going Downhill?
FTX, the world’s second-largest crypto exchange, is dead. Sam Bankman-Fried, the creator of FTX, has long been idolized as the golden boy of crypto. Some people have even looked up to him as crypto's Warren Buffet. To make things worse, as the empire crumbles, SBF has not been making the best decisions with FTX’s user’s money.
SBF also created Alameda Research which is a separate entity from FTX. Alameda was another crypto trading firm, run by SBF’s ex-girlfriend, that was later revealed to be working in unison with FTX. It gets better. FTX’s entire team was living with SBF as reported in by Butcher with EFinancial Careers. “The key players at FTX appear to be nine people who live together in the luxury Bahamian penthouse owned by the firm. They include SBF, Ellison, chief technology officer Gary Wang, and FTX director of engineering Nishad Singh. Coindesk says that all are or used to be in relationships with each other. Ellison previously dated Bankman Fried.”
How Did This Happen?
It all started when Changpen Zhao, the creator of Binance, stated in a tweet that they would be liquifying all of their FTT from the exchange. When the number one crypto exchange withdraws the native token from the second-largest crypto exchange you can guarantee that something is wrong. CZ tweeted that “We will try to (liquify remaining FTT) in a way that minimizes market impact. Due to market conditions and limited liquidity, we expect this will take a few months to complete.” But as soon as Binance and CZ released this reasoning on Twitter, the floodgates opened and many people started liquidating all of their cryptos from the FTX exchanges.
That tweet was only the second part of a four-part thread that CZ shared with crypto Twitter. In the third part of his tweet, CZ also stated that “Binance always encourages collaboration between industry players. Regarding any speculation as to whether this is a move against a competitor, it is not. Our industry is in it’s nascency and every time a project publicly fails it hurts every user and every platform.” Zhao was stating that he wanted to help FTX, the second-largest exchange and pillar of the crypto community, for altruistic reasons. Because FTX was not transparent with how they were handling their money, CZ had no choice but to announce that he was going to withdraw all of Binance’s FTT holdings from FTX’s exchange.
Within CZ’s final tweet, he acknowledges that when Binance buys a token they hold it for long amounts of time. FTX has not been transparent about any of its transactions and where its money was going. CZ wanted to remind crypto Twitter that it emphasizes transparency as noted in his final tweet, “We typically hold tokens for the long term. And we have held on to this token for this long. We stay transparent with our actions.” Many on Twitter have stated that FTX did not have enough liquidity in their reserves whenever their users would want to withdraw all of their assets.
A tweet from Mario Nawfal has brought many to understand that FTX’s infinite money loop was being done for a while and Binance knew about it. FTX and SBF did not want to stop and finally, CZ and Binance pulled the plug and made the information public. Nawfal’s tweet can be seen here. Overall, Nawfal heard from a reliable source in one of his Twitter spaces that, “Apparently CZ warned Sam re his reckless actions on multiple occasions, but SBF ignored him. As things got worse, CZ saw no choice but to make the issue public. This led to the infamous tweet by CZ 3 days ago that took down FTX. CZ had no choice.”
Resignation and Bankruptcy
Julia Horowitz from CNN Business wrote that “This week, investor Sequoia Capital said it had marked the value of its FTX stake down to $0. The exchange — said to be short between $8 billion and $10 billion — was unable to meet customers’ withdrawal demands. Bankman-Fried resigned Friday and FTX filed for bankruptcy protection in the United States after a bailout from rival Binance fell through.”
As you can imagine, FTX gained a lot of credibility and trust in the world as they recruited high-profile backers including SoftBank, Tiger Global, and Singapore’s Temasek. Celebrities such as Stephen Curry, Tom Brady, and Naomi Osaka were also affiliated with FTX. They've all cut ties with the exchange following the news of bankruptcy.
From the moment FTX, FTX US, and Alameda Research filed for bankruptcy the SEC started investigating SBF and his team. There may be a silver lining. Many believe that their downfall could bring desperately needed regulation for investors, assuming it is intelligently designed, and doesn't overreach.
NEWS UPDATE
When it rains it pours. FTX’s wallets have been hacked! More than $600 million have been mysteriously pulled from the exchange. CoinDesk notes that an account administrator wrote in the FTX Support Telegram Chat that, "FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don't go on FTX site as it might download Trojans,”. The message was later pinned by FTX General Counsel Ryne Miller. Many FTX holders are reporting a $0 balance on their accounts which would mean the hack is coming from hackers that were affected by the FTX bankruptcy earlier this week. But many are speculating that this could be an inside job from FTX workers that are pulling the crypto from different wallets with domains such as “fucksbf.eth” and “fuckftxandsbf.eth”. Either way, you should probably delete the FTX app IMMEDIATELY.
The hack and the hacker are being investigated and pursued by the crypto community's many hackers and sleuths. According to Satoshi Stacker on Twitter, "BREAKING: The FTX ”Hacker” just funded his TRX wallet from Kraken. The same wallet that holds the stolen funds. This means Kraken should have enough information to track down this individual/Individuals together with law. If it’s Sam this is basically him not caring."
More groundbreaking news breaks by the minute. I suspect this situation is far from over. We'll keep you updated.
Thanks for reading!
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