As the weather gets colder and we approach the winter, the cryptosphere continues to be a chaotic wild west of sorts. Front and center in this week’s volatile activity has been FTX. What began with a headline announcing Binance’s plan to acquire FTX soon turned into a week-long saga of unprecedented chaos culminating with FTX, once one of the largest crypto exchanges, filing for Chapter 11 bankruptcy protection in the US.

Here’s how the story unfolds…

Phase One: In November of 2018, SBF launches quantitative hedge fund Alameda Research promising investors high returns with zero risk. A few months later, SBF starts a crypto exchange,  FTX, which becomes the second biggest exchange behind Binance. 

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Phase Two: In the public eye, SBF held himself out as a humble, frugal man—a champion of doing “good for the future of the world.” Like the public, the CEO of Binance, CZ, begins to trust SBF. However, what began as a friendship between the two leaders soon turned into a competition between the two largest crypto exchanges. Accordingly, Binance decided to sell its stake in FTX and take $2B of the FTT token (the token FTX created and used for trading fees). 

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Phase Three: During this time, SBF focused on establishing regulatory and policy status. On November 6th, CZ publicly announced that SBF has been lobbying for regulation that would hurt Binance. As a result, Binance decides to sell all of its FTT. Thereafter, panic ensues in the market and the price of FTT drops over 20% overnight. Over a billion dollars worth of withdrawals follow and FTX faces a liquidity crunch. 

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Phase Four: In light of the liquidity crunch, Binance announces its intent to buy FTX. However, less than 24 hours after the announcement, Binance pulls out of the acquisition and soon thereafter on 11/11, FTX files for US Chapter 11 bankruptcy. 

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Phase Five: While there is no conclusion yet, at the instant moment we know Sam used FTT as collateral to borrow billions of dollars that he could not pay back. He bought dying companies like Voyager and BlockFi to build an empire for himself. He took users’ money and took company funds to purchase real estate and to use personally. 

While Netflix is probably working on a documentary of the FTX scandal, I will certainly be binging this crazy crypto content in real-time. 

***To be continued***