Holy Moly! One of the craziest week in the crypto space.
Crash landing of FTX, BlockFi soon to declare bankruptcy, and a $200M bad debt?
The Coin Weekly
November 11, 2022
Crypto ecosystem is facing yet another blow up and this time it's HUGE. If you are one of those who got affected from the FTX feud, we know it's tough but STAY STRONG. No one knows if this event was pre-planned or was a result of sudden investigation, all we know is crypto market is bleeding red and people are losing funds :(
There are a series of events that will unfold in the upcoming days with lots of projects, protocols, VCs, investors, etc going bankrupt. The fall of FTX is huge for the whole industry. Let's explore some of the important news so far.
FTX/Alameda went from a 40B+ empire and a 10B+ hedge fund to literally -9B.
The series of consecutive events that led to the fall of FTX and SBF's journey from Billionaire to Bankruptcy👇
On 25th August 2022, Sam Trabucco quits as Alameda Research CEO.
On 27th September, Brett Harrison quits his position of FTX US President.
On 17th October, the Texas State Securities Board started investigating FTX US over allegations that it offers unregistered securities products in the U.S. through their yield-bearing service.
On 2nd of November, Coindesk published a report that disturbingly details how a large portion of Alameda Research's, one of the biggest cryptocurrency hedge funds, equity hinges on FTT. The report included information on the hedge fund's total assets and liabilities. The total assets are $14.8 billion, which consists of $5.8B in $FTT, $1.2B worth of $SOL, and $3.37B worth of other assets. Total liabilities are at $8B, of which $7.4B are classified as loans, and $292 million are owed FTTs. This report disturbingly details how a large portion of Alameda’s equity hinges on FTT.
On 4th November, Dirty bubble media published an article stating that SBF had found a way to “print money out of thin air,” against which he then borrowed billions of dollars from unknown parties.
On 5th November, amid Alameda's insolvency rumours, Binance receives $585M in $FTT sent from an unknown wallet. CZ later acknowledged this transaction as their own.
After a string of FTT withdrawals in response to CZ's tweet, Alameda Research CEO offers to buy back $FTT at $22 OTC.
As the news spread, FTX stablecoins reserves reach year-low as panic sets in and everyone started withdrawing funds.
To control the situation, SBF tweets FTX is doing good and user's funds are safe.
On 8th November, FTX halted withdrawals. And CZ announced FTX has a significant liquidity crunch and that Binance signed a non-binary Letter of Intent to fully acquire ftx.com
The market condition went from bad to worse with FTX hitting as low as $2.
Solana is worst hit from this collapse. Because Wrapped Sollet tokens on Solana are backed by FTX/Alameda. These tokens were used to bootstrap the ecosystem and have a healthy presence in Solana DeFi ecosystem. The problem is if FTX/Alameda evaporate or are unable to meet redemptions for the tokens, they will have will have zero value. The collapse of these tokens will prove to bad for SOL tokens and on top of it Solana validators are scheduled to unlock 49.6 million SOL on 10th of November. "SOLANA COMMUNITY STAY STRONG".
On 10th November, Binance did their due diligence and decided that they will not pursue the potential acquisition FTX.com.
SBF filed for bankruptcy and personally owes lenders over $650 MILLION. SBF tells his investors that FTX needs $8B in emergency funding.
BlockFi is pausing customer withdrawals.
Reportedly, BlockFi has just halted all withdrawals and has hired 3 bankruptcy lawyers. Earlier in July, SBF-led FTX US proposed a deal to acquire BlockFi. FTX US had also announced that it was giving BlockFi a $400M revolving credit facility to shore up its finances in the midst of market uncertainty.
On 8th Nov, BlockFi ensured that BlockFi is an independent entity inspite of $400 credit line with FTX. But today i.e on 11th November, BlockFi announced that there's lack of clarity hence they are pausing all activities on the platform.
Sequoia writes-off over $200M FTX investment as ‘worthless’
The venture capital firm Sequoia Capital announced that it will write down to zero its roughly $210 million investment in the cryptocurrency exchange FTX, as the possibility of bankruptcy looms.
After all this turmoil, A16z, Tiger Global, Coatue, Softbank, Paradigm, Ark, 3AC, Alameda, FTX, Babel,Sequioa,LFG are all down bad 🎢
SBF plans to raise funds
According to leaked slack messages, Sam Bankman-Fried plans to raise more funds to repay customers and investors affected by the collapse. SBF added that FTX international may merge with FTX US to increase its liquidity and fund operations.
FTX reached out to Kraken for a possible bailout. And, Tron founder Justin Sun has surfaced as a potential messiah as he revealed that he and his team are working on a possible solution to help FTX in every way possible. Read here
FTX announced that they have reached an agreement with Tron to establish a special facility to allow holders of tron (TRX), bittorrent (BTT), just (JST), sun (SUN) and huobi token (HT) to swap assets from FTX 1:1 to external wallets.
Lead Slack conversation of #SBF 👀
— The Coin Weekly (@thecoinweekly)
Nov 11, 2022
Binance proof-of-assets
Binance published a new page of its website entitled “Proof of Assets” where it outlined all of its asset holdings, on-chain addresses for each token along with a link to show the correlation with bridged assets on other chains.
The Stablecoin imbalances in DeFi
The Curve 3pool has become 84% concentrated on USDT as DAI and USDC balances fell below 8% each. A significant imbalance could lead to liquidity issues as users attempt to withdraw funds in different denominations than those used to deposit.
This literally made me say “holy fucking shit” out loud 3 times in a row.
— DIRTY BUBBLE MEDIA: ALL CAPS NOW (@MikeBurgersburg)
Nov 10, 2022
MARKET DEVELOPMENTS
The market is very volatile with every token down by almost 25%.
CRYPTO JARGON
We cannot emphasise enough to "Use Decentralised Exchanges and hold your valuable digital assets in a cold wallet". Not your keys, not your coins.
The gem of the day is DZap. DZap is a decentralised platform that is making the swapping process seamless and more user friendly. Their vision is to unify multi step processes in DeFi into ONE. DZap provides "Batch Swap" feature for user to swap multiple cryptocurrencies in a single transaction.
Meaning that you can swap more than 50+ tokens in one click. Batch buy/sell without having to worry about multiple swap. In addition, DZap saves upto 42% on gas fees and 80% of efforts.
Market condition is volatile because of the ongoing FTX fued📈
Most of us either wants to sell our assets to protect against the price drop or looking to acquire more tokens during this dip👀
Well, @dzap_io's "Batch Swap" is the feature of the moment🧵
— DZap (@dzap_io)
Nov 8, 2022
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DeGens! Ape responsiblyThis too shall pass🤞