FTX Insolvent?! Craziest Week in Crypto EVER!! The Latest!!

A few days ago FTX one of the largest Crypto exchanges collapsed and Alameda Research one of the largest market Makers in all of crypto is believed to Be in a similar position due to its Relationship to FTX The crypto markets have collapsed in Kind due to the uncertainty around just How much damage this could do to the Entire industry and the resulting Liquidations are taking many coins and Tokens to multi-year lows today I’m Going to give you a bit of history about These two peculiar crypto companies tell You what we know so far about their Current statuses and assess just how Much this could affect all of crypto I’ll start by saying that the situation Is changing fast and some of the Information in this video may be out of Date by the time it hits the tube That’s why I’ll be doing another In-depth update once the dust has Settled I reckon we’ve only just scratched the Surface of the truth about both Companies I also want to state that I like many Others am utterly shocked by what has Happened and also do have funds stuck on The exchange albeit not Bank breaking Amounts as I keep the vast majority of My funds in Cold Storage I’ve always Advocated for this and this recent blow

Up only illustrates how no centralized Exchange can ever be fully 100 trusted Anyways back to the video As many of you will know FTX and Alameda Research were both founded by Sam Bankman freed or SBF as he’s known SBF Holds a bachelor’s in physics from MIT And spent the first three and a half Years of his career working as a Trader For Jane Street one of the world’s Largest market makers In late 2017 he realized that there were Lots of trading opportunities in Cryptocurrency so he founded a crypto Trading company called Alameda research With his friend Gary Wang another MIT Graduate who was tired of working at Google and wanted something new to do if You watched our video about the richest People in crypto you’ll know that Alameda’s claim to fame was a Bitcoin Trade between the United States and Japan BTC was 10 cheaper in the US than Japan So Alameda would buy the BTC in the US And sell it in Japan for an instant 10 Profit this became known as the kimchi Premium Alameda started this Arbitrage Trade with just two hundred dollars and Soon scaled it up to the point that they Were executing 10 to 15 million dollars Of cross-border BTC trades per day note That it seems most of alameda’s initial Investment Capital was borrowed in case

That matters on that note you should Know that Sam chose the name Alameda Research specifically because he was Concerned about scrutiny from Banks who Were skeptical of crypto in his own Words quote if we’d named ourselves Shitcoin day Traders the banks wouldn’t Have worked with us in case that didn’t Give it away Alameda didn’t just trade BTC in a 2019 presentation Sam revealed That Alameda was quote trading every Coin on every exchange and making mad Money in the 2019 interview the Interviewer revealed that Alameda was Making four to five percent per month During a bear Market Alameda’s massive profits made it Possible to accumulate enough coins and Tokens to become one of the largest Market makers in crypto Alameda was soon Working with every major crypto exchange To some extent and in the case of Binance it was assisting with large Over-the-counter or OTC trades That’s why when binance got word that Sam and Gary were starting a new Cryptocurrency exchange that was focused On Futures Trading it made sure it was One of the First Investors the FTX Exchange was founded in April 2019 with Samus CEO Gary scto and binance as one Of its biggest backers this is where Things get interesting because it’s not Entirely clear what Sam’s position is or

Was in Alameda nor how much influence he Has or had over the company His LinkedIn biography notes that he Stepped down as the CEO of Alameda in April 2019 but the Forbes 30 under 30 For 2021 notes Sam as alameda’s CEO Not only that but the LinkedIn profiles For current Alameda CEO Caroline Ellis And the former co-ceo Sam Trabuco Suggests they only filled Sam’s CEO Position in the summer of 2021. this is Just one of many peculiarities in the FTX Alameda relationship I’ll come back To Caroline and Sam Trabuco later Now when FTX first started there wasn’t Much Buzz about the exchange Sam even Admitted in an interview that they quote Didn’t know the first step to get users But knew there was an army of 20 million Futures Traders on other exchanges who Are having a bad time and wanted a Better place to trade according to Sam The Catalyst that kick-started ftx’s Growth was the private sale and Subsequent listing of its ftt token in The summer of 2019. This attracted the eyes of investors and Traders alike and ftx’s close Relationship with Alameda and binance Led many to believe FTX would become a Big deal In terms of tokenomics ftt started off As an erc20 token on the ethereum Blockchain with a maximum supply of 350

Million Today’s ftt exists as an SPL token on The Solana blockchain and as a bep2 Token on the BNB chain but almost all of Its Supply is still on the ethereum Blockchain Of ftt’s initial Supply 20 was sold to Investors across three Private Sales in 2019. according to massari the list of Investors in ftt’s Private Sales Included Alameda binance coinbase Multi-coin capital and other crypto VCS It looks like multi-coin is the only one That’s been burned so far According to the ftt transparency page More than half of ftt’s initial Supply Was allocated to the company and team All this ftt finished vesting in May This year funny that Anyhow coindesk’s article from earlier This month about the relationship Between Alameda and FTX suggests that The term company and team includes Alameda more on that in a moment The remaining 30 or so percent of ftt’s Initial Supply went towards various Initiatives and incentives related to or On the FTX exchange this is to be Expected given that ftt’s primary use Cases are as collateral for Futures Trading and to lower trading fees on the FTX exchange keep that part in mind As with all exchange tokens FTX uses a Portion of trading fees to buy back and

Burn the ftt token if you watched our Video about exchange tokens you’ll know That FTX has the most aggressive buyback And burn schedule of them all burning Ftt with trading fees every Monday Obviously buying ftt raises its price Whereas burning it decreases its Supply Which further increases its price if Demand stays the same The result is that the value of exchange Tokens goes up over time often Regardless of actual crypto market Conditions so far over 21 million ftt Have been burned and I feel obligated to Tell you that a massive amount of ftt is Scheduled to be burned this coming Monday That’s simply because all the chaos on The FTX exchange resulted in abnormally High trading volume FTX still follows through with its Buyback and burn we could see a short Squeeze on ftt that’s similar to the Short squeeze we saw on celsius’s Cell Token now this is a warning to anyone Still going short and to those who are Thinking of going long because there’s No guarantee a buyback will occur It’s also worth pointing out that On-chain statistics suggest there are at Least 400 000 holders of ftt almost all Of whom are thoroughly in the red This means any ftt pump is likely to be Received with a lot of cell pressure

From those trying to recover their Losses you have been warned folks so Please just don’t go there that is Financial advice by the way S in 2020 ftx’s popularity started to Explode this was due in part to the Unprecedented amount of stimulus that Tempted many Millennials into trading With 100x leverage on coins and yet To be listed altcoins on FTX Ftx’s popularity was also due in part to Project serum a defy project by FTX Those of you around in 2020 will know That this is when the famous defy summer Occurred this is basically when all the D5 protocols really blew up with 1 000 Yields and all that other defy Degen Stuff it’s also when the crypto bull Market really started to gather Steam What’s funny is that folks like Sam Weren’t famous at all back then Sam Admitted in an interview with blockworks That he didn’t really know anyone in Crypto until 2021 he also admitted on Many occasions that he has a bad habit Of going big sometimes too big when a Money-making strategy is working this Bad habit helped Sam become one of the Richest people in crypto and his massive Wealth opened many doors in Washington DC and around the world If you’re a regular on crypto Twitter You might remember all the jokes about How crypto was really Sam’s world and we

Were all just living in it This ties into all the stuff that’s Happened with FTX and Alameda over the Last week and I’ll reiterate that this Is an ever-changing situation it’s also Not entirely clear exactly when FTX and Alameda started to experience issues Believe it or not but Alameda was Apparently hours away from insolvency Due to liquidations more than two years Ago when the markets crashed in response To the pandemic This was implied by Sam in that Blockworks interview when discussing a Twitter thread by Sam Trabuco about the Crash This is important to mention because it Suggests that Alameda has been engaging In Risky trading activities for quite Some time it’s quite possible that FTX Was involved to some extent given that Alameda was of course the primary Market Maker for its own Exchange Now as far as I can tell ftx’s collapse Began with a coindesk article published On the 2nd of November which revealed That a significant amount of Alameda Researchers assets were held in ftt as Of the 30th of June this year more than A third of alameda’s 14 billion balance Sheet was held in ftt in the days that Followed lots of speculation started to Spread on social media about the nature Of the relationship between Alameda and

FTX Most of this speculation related to the Possibility that user funds on FTX were Finding their way to Alameda behind the Scenes this evolved into concerns that FTX didn’t have enough crypto on hand to Honor all user withdrawals Given the recent collapse of crypto Platforms like Celsius which had engaged In similar Shenanigans with customer Funds behind the scenes crypto holders Slowly started to withdraw from FTX out Of caution The bank run on FTX accelerated when Unchained sleuths discovered that ftx’s Reserves of stable coins eth and other Cryptocurrencies were rapidly decreasing It didn’t help that Alameda started Withdrawing stable coins eth and other Cryptocurrencies from other exchanges to Send to FTX this effectively confirmed That FTX was facing stress from user Withdrawals something that Sam was Denying on Twitter the entire time Meanwhile Caroline took to Twitter to Tacitly confirm that the Alameda balance Sheet reported by coindesk was correct But that it was much larger than Reported When binance got word of what was going On at FTX it announced that it would be Selling its ftt now if you watched Yesterday’s video on coin Bureau Clips You’ll know that in 2021 Sam bought back

The FTX shares binance had purchased in 2019 for roughly 1.5 billion dollars in Busd and 580 million in ftt for context Binance and FTX had a falling out Sometime in 2021 This is believed to be because of former Binance U.S CEO Brian Brooks who was Allegedly leaking sensitive information About binance to FTX Brian was only the CEO of binance us for Four months and attended multiple FTX Events after leaving There was speculation that FTX could Have been involved in the league of this Information to the mainstream media such That they could run hit pieces on Binance the purpose of these hit pieces Was to point Regulators in binance’s Direction so naturally CZ wasn’t too Impressed with ftx’s Shenanigans and Decided to de-risk from binance’s ftt Stake the news that binance would be Selling such a massive amount of ftt Resulted in speculation that FTX would Dump or de-list binance’s BNB coin in Retaliation The conflict caused both tokens to Plummet and all the uncertainty added to Their volatility It was at this point that Caroline made The incredibly suspicious decision to Publicly offer to buy binance’s entire Ftt stake at 22 a pop over the counter This supercharged further speculation

That Alameda and FTX were using ftt as Collateral for crypto loans and feared Getting liquidated now while I have yet To see any on-chain evidence of this It’s more than likely that ftt was being Used as collateral for a lot of Futures Trading on FTX you’ll recall that this Was one of the primary use cases for ftt And it’s likely that FTX and Alameda Weren’t the only whales using large Amounts of it as collateral even though Ftt had a fully diluted market cap in The billions the token had low liquidity Meaning that it didn’t take much money To push its price up or down this means It’s possible the fears that binance was Going to sell ftt were enough to crash It its price before binance even sold a Single token I imagine that this Resulted in hundreds of millions of Dollars of ftt liquidations on FTX which Due to the token’s low liquidity caused Its price to fall further even faster I Suspect that FTX and Alameda started Selling off the other cryptos they held To prevent FTX from collapsing causing Other cryptos to crash around this time Rumors started to circulate that FTX had Started pausing withdrawals now many in The crypto Community couldn’t believe That FTX or Alameda could possibly be Facing insolvency due to their Supposedly immense War chests FTX alone Had raised more than 1.8 billion dollars

From investors across its lifespan And then the unthinkable happened CZ and Sam announced that binance was intending To buy FTX to quote help cover the Liquidity crunch This confirmed that FTX was in trouble And it led to speculation that FTX could Be saved assuming it’s intermingling With Alameda wasn’t nearly as bad as Believed unfortunately it looks like Ftx’s financials were seriously effed up Because binance pulled out of the deal Earlier today after FTX revealed an 8 Billion dollar hole this effectively Confirms that Alameda is also in trouble And if you need more evidence check Their website it’s gone offline This brings me to the big question and That’s how much the FTX Alameda Situation could affect the crypto Markets as a whole well in case you Haven’t noticed the crypto Market is in Free fall already and I repeat that a Part of all the cell pressure is Probably coming from Alameda research That’s because Alameda isn’t just Another crypto company they’re a market Maker meaning a substantial percentage Of all the crypto on every exchange is Owned by them Last year Alameda was making 10 of the Crypto market and that figure was Probably much larger until recently if You want an even scarier statistic

Consider that Alameda is the largest Recipient of all the usdt that’s ever Been printed by tether of the 110 Billion usdt minted between 2014 and 2021 Alameda received around 50 billion Interviews with Sam suggests that Alameda was using this usdt to bypass Banks make of that what you will now it Wasn’t just exchanges Alameda was Providing liquidity to Alameda was also One of the largest liquidity providers In defy especially on Solano that’s Primarily because of ftx’s Aforementioned D5 project serum and the Important role it played in Solana’s D5 Protocols speaking of Solana both Alameda and FTX were heavily invested in The project and many tokens in its Ecosystem according to crunchbase Alameda has made almost 200 investments In crypto projects and companies and Many sources suggest FTX has invested in At least 50 crypto projects now I’ll be Doing a video about the crypto projects That will be most affected by FTX and Alameda’s collapse next week but if you Can’t wait just check coin market cap Chances are that all the cryptos that Have dropped dropped the most over the Last week had the highest exposure to FTX and Alameda And then there’s crypto regulations Sam FTX and Alameda were well-known names in Washington DC the worst part is that

They presented themselves as the creme De La Creme of crypto the fact that all Three of them have fallen spectacularly From Grace is going to leave a massive Stain on the entire crypto industry the Craziest part is that ftx’s implosion Has many disgruntled individuals and Institutions in the crypto Community Calling for aggressive crypto Regulations specifically more Transparency from cryptocurrency Exchanges about the custody and Segregation of customer funds this is Exactly what we predicted would happen In our video about Michael Barr the vice Chair of the Federal Reserve who is Itching to use the laws he created in The aftermath of the financial crisis to Crack down on crypto it’s not just Michael or the FED either Late last night the Department of Justice or doj and the Securities and Exchange Commission or SEC announced They were investigating FTX This is a timely announcement given that The Commodities Futures Trading Commission or cftc had earlier announced That it too was watching the FTX Situation To clarify the crypto industry has been Pushing for the cftc to become its Primary regulator because its Regulations are more reasonable and Easier for crypto companies and projects

To follow the SEC swooping in is a sign That it wants to make sure the cftc Stays in second place not good now if There’s anything to be salvaged from This truly god-awful situation is that Sam’s own proposed crypto regulations Will probably never get off the ground If you watched our video about those You’ll know that he was essentially Pushing for crypto to become part of the Existing Financial system especially Defy What I’m left wondering is who is Responsible as bad as Alameda and FTX Were acting behind the scenes both were Brought down by truly exceptional Circumstances Who exactly is responsible is something I’ll speculate about the next time I Cover this show so look out for More updates now many people’s minds are Probably made up on that score already But perhaps there’s more to it than we Know yet For now I’ll leave you with this Sobering thought the Fallout we’ve seen So far is truly just the beginning of Something that’s probably going to take Months or more to sort out until then We’re very likely to see lower lows for Most coins and tokens so brace Yourselves guys the real crypto winter Is just getting started Now instead of my usual like And

Subscribe sign off Spiel I want to end With a few personal thoughts firstly my Heart goes out to all those people who Have funds stuck on FTX however Stressful upsetting and enraging this Situation must be please remember that Your first duty of care is to yourself And those you love please don’t do Anything rash it’s money and there are More important things in this life than Money if you’re in a bad place then Please do talk to someone it will help Second This Disaster has caught almost Everyone by surprise including all of us Here at coin Bureau my team and I are as Disgusted by what we’re seeing as Everyone else and our primary wish is That ftx’s customers are made whole as Quickly as possible whether that will Happen I really can’t say now third crypto will Survive this however Grim things are Going to get from here it’s going to be Painful and not every project is going To make it but remember that this is Sadly yet another instance of a Centralized crypto platform going under Due to mismanagement incompetence and Quite possibly criminality But blocks are still being produced on Blockchains and great projects are still Being built if you believe in the Technology then you must believe that This will eventually pass

But we must all push for change because We can’t let this sort of stuff keep Happening time and time again Bitcoin was invented because Satoshi saw How broken our current Financial system Was and still is but the crypto industry As a whole has forgotten this and has Moved ever closer to what Satoshi wished To destroy Centralized entities misusing customer Funds opaque financial institutions Doing Shady stuff with unfathomable Amounts of other people’s money Self-interested and incompetent Rich Dudes holding all the power with none of The oversight God damn it none of this Has any place in crypto and yet here we Are now only we can get our house in Order and that process has to start Today [Music] Thank you

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