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Bitcoin is nothing if not resilient.
As furious as the news cycle has been, we're far from having the full picture of what went down at FTX.
With every new detail generating more questions than answers, it's anyone's guess as to which domino will be the next to fall.
And yet, Bitcoin is just ~10% off its previous 2022 low from June (when SBF and FTX were on top of the world).
Having said that…let’s get to it!
“Never in my career have I seen such a complete failure…”
See you in court
Feasibility, viability, applicability
1. “Never in my career have I seen such a complete failure…”
And that’s coming from the guy whose job it was to clean up the Enron mess.
Just how bad were things at FTX? I read through the 30-page bankruptcy filing. Here's the worst of it (so far):
Expense reimbursements were submitted over chat and approved or rejected via emoji
Over $1.5 billion in personal loans to SBF and Alameda's Director of Engineering
Company decisions were largely made over chat with message auto-deleting periodically, meaning very few records were kept
Never had board meetings
No cash management system
No proper employee records, suggesting some were fake
Real estate bought for personal use (and under personal names) with company funds
Crypto deposits were never recorded on the "balance sheet"
In the time it takes for this newsletter to get from Substack to your inbox, I'm betting we'll have another half-dozen new developments.
Follow them all here!
2. See you in court
An Oklahoma man filed a class-action complaint in Florida (where FTX has offices) this week.
The lawsuit alleges FTX used deceptive marketing schemes to fool unsophisticated investors into believing their assets were safe while really they were being "invested" in made-up tokens.
None of which is untrue, perhaps only incomplete as it was a lot more than just sophisticated investors who got duped.
The suit, which claims that US investors suffered "over $11 billion in damages," names SBF and 11 celebrities who appeared in FTX ads, sayings none of them "performed any due diligence". Again, no lies detected here.
The defendants include Shaq, Steph Curry, Naomi Osaka, Kevin O'Leary, Larry David, Gisele Bundchen, and Tom Brady.
Meanwhile, the FBI is working on extraditing SBF—who also may or may not have a sex tape of him and (former) Alameda CEO Caroline Ellison leaking today—to the US.
3. Feasibility, viability, applicability
Sending you into the weekend with a break from the FTX drama.
This week, the grownups NY Fed's Innovation Center (NYIC) launched a proof-of-concept pilot for a central digital currency (aka DBDC) to explore the possibility of operating on a "shared multi-entity distributor ledger" (aka blockchain).
Over the course of the 12-week program, some of the finance’s biggest institutions—Wells Fargo, MasterCard, BNY Mellon, US Bank, HSBC, PNC Bank, and TD Bank—will issue tokens and settle transactions through simulated central bank reserves.
Specifically, the pilot will test the “technical feasibility, legal viability, and business applicability” of blockchain tech.
I'm not usually one for jargon, but reading those words in the vicinity of crypto right now is a breath of fresh air.
What else we Grittin’ On?
NIKE. The retail giant plans to open a virtual sneaker store and trading platform. Business as usual at Nike.
VOYAGER BID. Previously on the cusp of an FTX bailout, Voyager Digital's white knight may turn out to be Binance. Wave Financial and Cross Tower are also in the running.
GBTC. Grayscale is hoping for an SEC win for its Bitcoin trust. The latter has already denied the former's bid to convert its Bitcoin trust into an ETF once.
DCA. El Salvador would have saved $18 million by dollar-cost averaging. President Bukele says he's buying one Bitcoin each day from now on.
SOURCES*
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