Illustration by Mitchell Preffer for Decrypt
This week, the crypto industry experienced one of the most sudden and devastating declines in wealth in financial history. In Sam Bankman-Fried 16 billion dollars the empire—which in turn was created through FTX and his hedge funds Alameda Research—went to zero in five days, going bankrupt. 130 affiliated companies with that
Naturally, it was all Twitter could talk about. The world’s favorite microblogging platform was an essential way for people to air their thoughts on the issue, serving as both a battleground and a bulletin board for the crisis.
Covering all the responses in depth is a daunting task that would be impossible in the format of an article, so here is a summary of the most important plays from all the main actors, along with the biggest responses from third parties. the industry
The drama started last Sunday, when Binance CEO Changpeng Zhao said he would be liquidating all of his exchange’s FTT tokens. FTT is the native token of FTX.
Several hours later, Zhao gave the reason for this.
The tweet rocked a bank as customers began withdrawing funds en masse from the exchange. A great 6 billion dollars FTX left for the next 72 hours. To put that into perspective, the exchange typically handled “tens of millions” in withdrawals on an average day.
On Tuesday it became clear that FTX did not have the liquidity to handle withdrawal requests; pullbacks paused and things got juicy when Changpeng Zhao stepped in to rescue the exchange.
Bankman-Fried also announced the rescue on her profile at the same time. Further down his thread, he was thanking his lucky stars That he had a friend like CZ.
Later that day, Zhao tweeted that foreshadowed the next day’s events. His feet seemed to be cold.
Then on Wednesday came the surprise:
Changpeng Zhao explained the reasons for the u-turn in a lengthy statement. He insisted that none of his actions were part of a “master plan.”
In Bankman-Fried’s lengthy apology thread the next day, she insisted she was trying to find him. alternate channels raising the necessary liquidity to keep all depositors of the exchange intact. Twenty tweets in, he congratulated Zhao.
The crisis ended Friday with the news that FTX filed for Chapter 11 bankruptcy. Alameda Research, along with the exchange’s American subsidiary FTX.US and approximately 130 affiliated entities will also file for bankruptcy.
Bankman-Fried has now stepped down as CEO and veteran bankruptcy attorney John J. Ray III will step into her shoes. Ray shepherded Enron through its bankruptcy proceedings, an apt parallel.
That day, Shiv Shrivastava, CEO of the DeFi Palladium project, saw a bittersweet symbol of Bankman-Fried’s fallen empire from his balcony.
During the week, a number of crypto companies rejected any connection to FTX, among others Coinbase, Circle and Tether.
Coinbase CEO Brian Armstrong announced that his company had no exposure to FTT tokens or FTX or Alameda. Armstrong attributed FTX’s liquidity problems to “risky business practices,” including conflicts of interest between deeply connected entities and misuse of client funds. He said it too lack of clarity of regulations In the US, consumers were driven to offshore exchanges such as Bahamas-based FTX.
Jeremy Allaire, co-founder and CEO of stablecoin issuer Circle, deny exposure to FTX He agreed with Armstrong and framed the crisis as a temporary aberration to the wider adoption of cryptography and its transformation into something of utility rather than speculative value.
Jesse Powell, former CEO of the Kraken exchange, had some very nice words to say about Bankman-Fried and his venture capital investors.
Su Zhu, founder of crypto hedge fund Three Arrows Capital (3AC) — an early victim of Crypto Winter — wanted to know that Bankman-Fried is not alone.
Notorious whistleblower Edward Snowden believes that FTX was a hoax from the start, along with Binance and Kraken.
Rep. Tom Emmer wanted people to know that Bankman-Fried was getting help from regulators.
And Twitter CEO Elon Musk said Bankman-Fried set off his “bs detector.”