FTX Summary: Going From #2 In World, To The Worst

A certain industry publication send shockwaves through the cryptoverse on November 2. Sam Bankman-Fried, founder and CEO of FTX Exchange and Alameda Holdings, might have aligned his companies a little too closely. An internal financial document revealed that much of Alameda’s assets came from FTT, the native digital currency of its sister company.

Social Media Smackdowns

FTX came in second place to Binance Holdings, the world’s leading crypto exchange. Bankman-Fried had an archrival in Binance founder Changpeng “CZ” Zhao. Like many other crypto titans, these two viewed themselves as “disruptive warriors.” Not just as proponents of the industry, but frequently getting into bloodsport-level feuds with each other online.

It went beyond CZ and SBF taking swipes at each other. The flame wars extend to names like Do Kwon, Alex Mashinsky, and Jack Dorsey, especially when it comes to battling critics for the world to follow. The best new plan might be to lay low.

Per Sadie Raney, an executive at the crypto hedge hedge fund Strix Leviathan, this activity has prompted her to scout for projects differently. From her on out, she will be looking at those heralded by people who are least likely to be social media figures.

She even commented, “I mean, Satoshi Nakamoto had it right, by building this amazing, amazing ecosystem and then never revealing his, her or their identity,” Satoshi Nakamoto is the mysterious founder of Bitcoin who has managed to remain completely anonymous.

A Rival to the Rescue

In the aftermath of FTX’s spectacular fall from grace, and losing $32 billion of investor’s funds, rival Binance made an offer to to buy the exchange. This was a last lifeline for FTX, but it was not a guarantee. CZ made it very clear he was going to perform his due diligence and take a closer look at the finances before anything else.

Apparently, it was a scary read. On Wednesday, November 9, Binance backtracked. Zhao explained on social media that this went far beyond finding advantage in a competitor’s downfall. Specifically, he tweeted, “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”

Admitting FTX Was Defeated

SBF has taken to Twitter as his mea culpa. Rather than laying low, he has been very vocal in taking responsibility for the meltdown. There have been multiple apologies, explanations, and promises of assistance.

Yet as FTX has filed bankruptcy, and Alameda has $8 billion in liabilities, Bankman-Fried is facing the $32 billion question: how do I recover client investments? As he ponders this daunting task, SBF did have another online exchange with a certain “sparring partner.”

Ever eloquent, the fallen billionaire simply commented, “So for now, all I’ll say is: well played; you won.” From the context, it is not difficult to determine who those words were directed to.

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