Inside Sam Bankman-Fried’s Doomed FTX Empire
The Wall Street Journal Takes a Look Inside Sam Bankman-Fried’s Doomed FTX Empire
It’s a free link. Here are some excerpts.
The emerging picture of what went wrong suggests that the crypto empire was a mess almost from the start, with few limits, financial or personal.
From its inception, the company was an unruly agglomeration of corporate entities, client assets and Mr. Bankman-Fried himself, according to court documents, corporate balance sheets shown to bankers and interviews with insiders. employees and investors. No one could say exactly what belonged to whom. Prosecutors are currently investigating his collapse.
Business money was used to purchase real estate, but records were not kept. There was not even a list of employees, let alone the terms of their employment. Bankruptcy records show an entity’s outstanding loans include at least $1 billion to Mr. Bankman-Fried personally and $543 million to a senior lieutenant.
The lives of the people who ran FTX and its related companies were also hazy. Ten of them lived and worked together in a $30 million penthouse at an upscale resort in the Bahamas. The hours were arduous and the boundaries between work and leisure were difficult to discern. Romance among Mr Bankman-Fried’s upper echelons was common, as was the use of stimulants, according to former employees.
“Nothing like regular amphetamine use to make you appreciate how stupid a normal, non-drug human experience is,” Ms Ellison tweeted. A lawyer for Ms Ellison declined to comment.
To the outside world, Mr. Bankman-Fried was the mayor of Cryptoland, the man charged with convincing lawmakers, investors and enthusiasts that he had built a new kind of finance. He urged Congress and regulators to approve his crypto trading model. On Twitter, he berated competitors for practices he called dangerous.
FTX and Alameda, the trading company, extended hundreds of millions of dollars in credit to back struggling lender BlockFi and made an unsuccessful bid to prevent lender Voyager Digital from going bankrupt.
Mr Bankman-Fried’s heroism drew comparisons to the private bailouts of John Pierpont Morgan that helped end the Panic of 1907.
What is an FTT worth?
Humans have assigned value to objects for eons. A dollar bill is just a piece of paper, after all. But its value comes from traditions and agreements, laws and practices formed over hundreds of years. Cryptocurrencies compress this into a single keystroke: create a cryptographic token with code, give it a name, and trick someone into thinking it’s worth $10. If you hold a hundred thousand of these tokens, you now have an asset worth a million dollars, in theory.
Alameda holds the lion’s share of FTT in existence. Before collapsing, Alameda had valued its FTT at $5.5 billion, according to the document. [Mish Comment: Now it’s about $8 billion in the hole.]
After a stint in Hong Kong, Mr. Bankman-Fried and FTX made the Bahamas their home, moving in 2021 to take advantage of the island nation’s crypto-friendly regulatory regime.
On the archipelago’s New Providence Island, an 80-square-mile oasis that resembles its financial elite like a small club, FTX has landed with a bang, according to island residents. The company quickly acquires high-end real estate.
Bahamian Prime Minister Philip Davis hoped that FTX would help center his country as the nexus of the crypto world, he has said in several public speeches. When given the opportunity to buy FTX stock earlier this year, a Bahamian FTX worker said employees had spent thousands of dollars each on stock.
FTX hired a Bahamian security company to guard FTX’s headquarters shortly before the collapse. After the news, the majority of non-local FTX employees left the island. Security guards said they were protecting nearly vacant buildings.
Before the company’s collapse, FTX employees frequented Island Brothers, an upscale French bistro a stone’s throw from the company’s headquarters, restaurant workers said. The owner got to know Mr. Bankman-Fried’s father, Stanford tax specialist Joseph Bankman, when he visited Nassau to spend time with his son.
Last week, the fall of FTX brought Mr. Bankman to Island Brothers in a dark mood. After a few jokes, the restaurant owner said, Mr. Bankman broke down in tears.
It’s a long but fascinating read about greed, arrogance, drugs, corruption, and above all, the absence of an account of anything at all times.
Meet Queen Caroline
Forbes wrote an interesting article ‘Queen Caroline’: The ‘Fake Charity Nerd Girl’ Behind The FTX Collapse
Alameda Research CEO Caroline Ellison is a mathematician who loves Harry Potter, fringe political philosophy and takes big risks. She is also one of the supporting players in Sam Bankman-Fried’s FTX disaster.
“Being comfortable with risk is very important,” Ellison said on a podcast in May. “There are a lot of people out there who are very smart, but not necessarily good at the messy world of trading, especially crypto.”
As FTX imploded in cartoonish fashion, going from “Assets are fine” tweets to bankruptcy in four days, attention turned to Alameda’s $10 billion in assets and its alleged practice of funneling deposits from FTX clients to invest in risky speculative bets. Several crypto companies once considered industry stalwarts are now on the verge of a similar fate. As daily headlines document years of alleged wrongdoing, the spotlight has widened beyond Bankman-Fried to her inner circle and landed on Ellison, a rare female leader in a male-dominated industry.
Some of her defenders, who refer to her as “Queen Caroline”, are supporters of Curtis Yarvin, a neo-reactionary political theorist and far-right darling. Many who have flocked to Ellison’s defense are rallying on Urbit, a peer-to-peer platform created by Yarvin, one of his supporters said online. Forbes. They believe Ellison was created to be the downfall person and claim former co-CEO Sam Trabucco, whom they derisively refer to as “Sam Tabasco”, is behind the Alameda implosion. Trabucco did not respond to multiple requests for comment.
Over the past two weeks, there has been much speculation about Ellison and Bankman-Fried’s romantic ties, which Bankman-Fried confirmed by telling The New York Times that the two were no longer involved. A CoinDesk report claimed that Ellison had serially dated Bankman-Fried and alleged that the two were part of a group of 10 housemates who had been intimately involved at one point. The exact contours of the pairings are unknown, but Venmo’s public dealings between Nishad Singh, Sam Trabucco, and FTX brand manager and people Cindy Watanabe show they’re paying each other for household attributes like “cabbage.” curly”, gas and lye.
Years earlier, Ellison had apparently written on Tumblr, with undecided seriousness, that after exploring polyamory, she thought “everyone should have a ranking of their partners, people should know where they stand in the rankings, and there should be vicious power struggles for the upper ranks” – a dynamic she likened to an “imperial Chinese harem”.
Is there anything left from FTX?
According to John J. Ray, the new CEO of the cryptocurrency exchange, some regulated or licensed subsidiaries of FTX have solvent balance sheets
A statement released Saturday by John J. Ray, the company’s new CEO, hit a bit more optimistic tone about the possibility of recovering assets compared to its previous austere assessment. On Thursday, the veteran bankruptcy executive said he had never seen anything as bad as FTX in 40 years in the restructuring industry.
“We are pleased to learn that many of FTX’s regulated or licensed affiliates, inside and outside the United States, have sound balance sheets, responsible management and valuable franchises,” Mr. Ray said. , who was hired to oversee the company during its bankruptcy. process, Saturday.
The filing identified 216 bank accounts with positive balances, offering the possibility that there was some value left in the wreckage of FTX for creditors to recover. He checked account balances worth about $564 million, according to Saturday’s filing. Much of this money, however, is either held in outside entities that have directly filed for bankruptcy protection or is considered restricted money, meaning others can to claim.
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From darling to zero
Bankruptcy Batter’s Box
Whatever remains of the FTX mess, if any, the attorneys handling bankruptcy filings will have it all.
With an overall negative balance of $8 billion, balances of $564 million won’t go far. Customers on the FTX will be the last in line.
The Wild West of crypto ends with a great implosion, but it is still ongoing. There are even more companies and players headed for the same fate as those mentioned above.
Genesis is currently bankrupt. The struggling crypto lender reportedly requested a bailout before suspending withdrawals this week.
This post is from MishTalk.Com.
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