Sam Bankman-Fried was once admired as the king of crypto.
Now Alameda and FTX are rumoured to be on the brink of insolvency.
π§΅: Here's how it all went wrong for SBF and FTX. π
Now Alameda and FTX are rumoured to be on the brink of insolvency.
π§΅: Here's how it all went wrong for SBF and FTX. π
For a long time, SBF was idolised in the space.
Famous for his:
β’ Arbitrage trading
β’ Founding FTX and Alameda
β’ Hugely successful investments like $SOL
Sam accrued an impressive estimated net worth of $10-14.5b at his peak.
Famous for his:
β’ Arbitrage trading
β’ Founding FTX and Alameda
β’ Hugely successful investments like $SOL
Sam accrued an impressive estimated net worth of $10-14.5b at his peak.
In recent times, FTX has been extremely busy leading huge fundraising rounds for new projects.
Aptos and Sui are the two most recent examples.
Aptos and Sui are the two most recent examples.
Sam was invincible.
Despite Luna causing chaos, he used the situation as leverage to continue an aggressive expansion plan.
β’ Bailed out BlockFi for $240m
β’ Bid for Voyager's assets
β’ Considered bailing out Celsius
Despite Luna causing chaos, he used the situation as leverage to continue an aggressive expansion plan.
β’ Bailed out BlockFi for $240m
β’ Bid for Voyager's assets
β’ Considered bailing out Celsius
However, in the background there were some cracks starting to appear.
Eyebrows started to raise when Alameda CEO Sam Trabucco suddenly resigned.
Eyebrows started to raise when Alameda CEO Sam Trabucco suddenly resigned.
Additionally, a month later FTX President Brett Harrison stepped down.
These resignations occurred just before it was revealed that FTX was facing some legal trouble in the form of a securities regulator probe.
SBF has a clear interest in politics, evidenced by his involvement in the upcoming midterm elections, in which he has donated almost $50m.
This comes after his plan to donate $1b in the 2024 U.S. presidential election (which he later backtracked on).
Clearly Sam has political interests at heart.
Clearly Sam has political interests at heart.
Although public sentiment was becoming more negative towards Sam, the DCCPA draft bill marked a real turning point for the public's perception.
A draft of the bill was first leaked online.
A draft of the bill was first leaked online.
Sam has seemingly been supporting the bill.
But despite Sam trying to play the "good guy" on Twitter, there were clear red flags throughout the bill which could pose significant threats to DeFi.
But despite Sam trying to play the "good guy" on Twitter, there were clear red flags throughout the bill which could pose significant threats to DeFi.
Multiple key industry figures have spoken out against the bill, most notably Bitboy, who is working on his own.
Erik Voorhees famously quizzed SBF on his stance during a Bankless interview.
This clip (which went viral) led to continued skepticism amongst the crypto community.
This clip (which went viral) led to continued skepticism amongst the crypto community.
The public damage for Sam was immense.
Sentiment shifted as people realised his intentions may be different from what was first thought.
This shift in sentiment was the precursor for what was to come next, and a major contributor behind the severity of the recent FUD.
Sentiment shifted as people realised his intentions may be different from what was first thought.
This shift in sentiment was the precursor for what was to come next, and a major contributor behind the severity of the recent FUD.
Concerns started to bubble on Wednesday when Alameda's balance sheet was leaked.
It revealed that "the net equity in the Alameda business is actually FTXβs own centrally controlled and printed-out-of-thin-air token" - Cory Klippsten.
It revealed that "the net equity in the Alameda business is actually FTXβs own centrally controlled and printed-out-of-thin-air token" - Cory Klippsten.
.@DylanLeClair_ did a great thread breaking down some of the concerns surrounding the balance sheet.
One of the accounts that first called Celsius' collapse published a report titled "Is Alameda Insolvent?"
The report labelled Alameda's situation as "precarious to say the least."
The report labelled Alameda's situation as "precarious to say the least."
More rumours started proliferating, and the FUD machine entered full force.
Allegations of FTX's insolvency started circulating.
Allegations of FTX's insolvency started circulating.
Then, we saw a MASSIVE $584m worth of $FTT transferred to Binance.
CZ confirmed that is was in fact Binance who executed the transfer.
We got full confirmation that Binance was exiting its $FTT position yesterday, when CZ announced his decision "to liquidate any remaining FTT on our books."
CZ fired shots at Sam, stating that they were selling as a result of "learning from $LUNA".
CZ indirectly referenced SBF's lobbying by claiming that he "won't support people who lobby against other industry players behind their backs."
CZ indirectly referenced SBF's lobbying by claiming that he "won't support people who lobby against other industry players behind their backs."
FTX's primary token $FTT dumped as a result, dropping 15% from its weekly highs.
However, it has found strong support around the $22 region.
However, it has found strong support around the $22 region.
Caroline, the CEO of Alameda Research, was forced to issue a response to CZ's sale.
In my opinion, this response felt desperate and was somewhat of a red flag.
We all know what happened last time someone tried to "steady" the ship.
In my opinion, this response felt desperate and was somewhat of a red flag.
We all know what happened last time someone tried to "steady" the ship.
$FTT isn't the only worry though, Alameda holds many more tokens which could be subject to downside pressure if the situation worsens.
The FUD surrounding FTX has resulted in staggering outflows, as people rush to withdraw funds.
The threat of a "bank run" was looming yesterday as some people were forced to wait 4 hours to process withdrawals.
The threat of a "bank run" was looming yesterday as some people were forced to wait 4 hours to process withdrawals.
Sam recently issued a response stating that FTX is fine and assets are fine.
However, I'm treating the situation with caution as when there's smoke, there's often fire.
The chances of FTX being insolvent are quite slim, but why take chances in crypto when there's viable alternatives.
The chances of FTX being insolvent are quite slim, but why take chances in crypto when there's viable alternatives.
I hope you've found this thread interesting.
Like/Retweet the first tweet below if you can. π
Like/Retweet the first tweet below if you can. π
As this situation evolves, I'll keep you updated by posting underneath this thread.
So make sure to follow me @milesdeutscher and turn on post notifications to stay updated.
So make sure to follow me @milesdeutscher and turn on post notifications to stay updated.
Update #1: Looks like FTX has stopped processing withdrawals.
Binance has fully acquired FTX. π€―
Binance has the discretion to pull out of the deal at any time, but their intention is to fully acquire FTX as per the terms of the LOI.
FTX withdrawals still arenβt processing as uncertainty looms surrounding the Binance acquisition.
Itβs a dark day for crypto and I feel for all those affected. π
This thread breaks down what happened in a technical sense.
Itβs a dark day for crypto and I feel for all those affected. π
This thread breaks down what happened in a technical sense.
It looks like the deal is on the brink of falling through. π¬
Itβs official. The deal is off.
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