Gossip. Accusations. Twitter battles. An episode of Game of Thrones. CZ (CEO of Binance) and SBF (CEO of FTX) are in the middle of it. But before we get into the drama of year, let me set the stage for you.
PART I – WHY THIS MATTERS
Binance and FTX are 2 biggest CRYPTO exchanges. Last year, they made up ~30% of all trading volume on exchanges and saw a combined $27.5T in trading volume… They’re rivals…Darth Vader vs Luke Skywalker.
PART II – THE BACKSTORY
But they weren’t always so competitive. In fact, back in 2019 Binance was a strategic partner and early investor in FTX. It was a happy marriage. Binance helped FTX. FTX helped Binance. And CZ became “Big Bro” of SBF. Then things suddenly ended. In 2021, FTX bought Binance’s remaining shares in the company. Binance received approximately $2.1 billion for the exit. Most of it was paid in FTT – FTX token (**Important for future reference**). Since then, Binance and FTX have become great rivals, with the two CEOs shooting each other every chance they get.
PART III – THE WEEKEND DRAMA
Last week CoinDesk released a report about Alameda Research finances showing that Alameda Research and FTX could be in financial trouble.
- It showed that 41% of Alamada’s assets are in FTT ( if they need to liquidate they would crash the FTT price)
- Then a guy that called the collapse of Celsius, dropped a post about how Alameda and FTX could collapse.
CZ “liked” it and then tweeted “Crypto is high risk.” Oh, drama! Remember how Binance got paid a bunch of FTXs tokens (FTT) when they exited their investment? Well, due to this research , CZ (Binance) announced that they were going to sell their FTT tokens (Binance holds 7. % of the entire FTT supply – a lot). The announcement sent shockwaves and within hours FTT dropped big time.
Now, before we go any further. Let me tell you a little bit about FTT.
- FTT is the magic internet money of FTX
- Top 50 holders account for 98% of the total supply
- Alameda and FTX holds 75% of the total FTT supply
- Alameda has about $ 6 billion worth of FTT on its balance sheet. However, FTT’s current market cap is ~$3.5 billion. This means that Alameda cannot sell without crasshing the FTT market (ie it is an illiquid asset)
PART IV – MARKETS PANIC
The sellers started selling and there were no buyers…anywhere. No one wanted to touch FTT with a 10 foot pole. The price fell by 35% overnight. Then it got worse… FTX started seing mass liquidations. Everyone tried to get their money out of FTX ($6 billion withdrawn in the last 72 hours).
Meanwhile SMB kept saying everything is Fine!
People continued to panic and doubt whether FTX would survive. Then suddently in the morning the withdrawals were stopped. Oh, surprise, surprise!
Everyone was going crazy over social media trying to figure out what happened. Then the news hit… FTX is entering a “strategic transaction” with Binance. What it meant was: Binance is signing a non-biding agreement to buy FTX due to their trouble with liquidity.
PART V – THE BANCTUPTCY
Only one day passed. Binance looks at FTX accounts and drops the FTX purchase contract. FTX is simply in too much of a mess.
Sam apologizes on Twitter ( I doubt anyone cares). Most of FTX’s legal team resigns while FTXs files for bankruptcy with a estimated $8 billion hole in their balance sheet. Withdrawals are frozen. Not your keys not your tokens . Absolute destruction. Second biggest Crypto Exchange has packed up. The saga is over. Or is it?
PART V – THE HACK
FSBF is no longer SEO and also may and up in in jail. Investigations show that customer’s funds were badly missmanaged.
SBF steps of as SEO and a new external guy steps in to clean up all the FTX mess.
Then Friday night suddenly, the last FTX money start moving from the wallet.. Something is happening. The first $30 million. Then $50 million… Then $600 million . Last FTX funds are being drained.
- FTX was hacked for all of its funds (both FTX US and FTX International)
- FTX users are reporting their wallet balances show up as $0
- FTX apps were hacked (P.S – if you still have any, delete them!)
- FTX site got hacked
Seems like this hacker is in God mode and has access to everything…
Not long after the hack, a private jet allegedly tied to Samuel leaves the Bahamas to Argentina. Is SBF on the run?
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