The FTX situation just got worse and (somehow) weirder...
If you've stayed off Crypto Twitter over the weekend:
You're smart, and we envy your zen mastery.
The FTX situation got worse and (somehow) weirder.
Here's what you missed...
What made it worse?
1) FTX US (which was thought to be safe) collapsed along side its siblings FTX International and Alameda Research (FTX's investment arm).
2) Turns out FTX and Alameda Research weren't just using their own money to invest and trade - they were using customer funds as well (~$10B worth).
3) Reuters revealed that Sam Bankman-Fried 'SBF' (FTX's CEO) had a 'backdoor' to FTX's books. Meaning he could move/spend customer funds and alter FTX's financial records, without the compliance team knowing.
...this one is a DOOZY!
4) On Friday night, all of FTX's remaining funds (~$600M) were hacked, and all customer accounts started to report $0 in funds.
To add insult to injury, FTX's apps were hacked as well, and the company is now advising users to delete them from their devices, as they may have been compromised.
...though, some are claiming this is a way for the FTX team to cover their tracks.
What made it weirder?
5) Sex, drugs, and rock n' roll blatant fraud. There was a wave of reports over the weekend on alleged inter-office orgies and medical-grade meth use.
(Told you it got weirder).
The alleged 'orgies' might be a stretch...apparently a lot of the higher-ups at FTX/Alameda were dating/living together - and from the looks of it, Twitter took these rumors and absolutely ran with them.
The drug use was a little more blatant...
The head of FTX (Sept 15, 2019):
The head of Alameda Research (April 5, 2021):
6) Remember the hack from Part 4? A lot of folks were claiming that it could have only come from inside FTX...or at the very least, with help from insiders.
Here's the match that sparked some wild and varying speculation:
At the same time FTX was being hacked/drained, the company's private jet took off from the Bahamas (where FTX is based), headed for Argentina. Leading many to speculate that SBF had taken the money and run.
SBF has since denied being on this flight, claiming to still be in the Bahamas.
...which makes sense - Argentina has an extradition treaty with the U.S. anyway, so it wouldn't have really solved anything.
7) Although, speaking of extradition - you know who doesn't have a treaty with the U.S? Dubai.
And according to CoinTelegraph, a source familiar with the matter told them:
"Three former FTX executives, as well as Alameda Research CEO Caroline Ellison, are looking for ways to flee to Dubai."
Caroline is currently in Hong Kong, so she might be able to make the jump.
As for Sam (CEO), Gary Wang (CTO), and Nishad Singh (Director of Engineering)? They're under supervision in the Bahamas, which means it will be very hard for them to leave.
To sum things up...
Here's a quote from Brian Chesky, CEO of Airbnb, that encapsulates the current mood of the crypto space:
"It feels like we were in a nightclub and the lights just turned on."
