Shaswata Kapat’s Post

FTX: A Cautionary Tale of Greed and Hubris ✴Introduction: #FTX, once hailed as a major player in the cryptocurrency exchange arena, witnessed a spectacular #downfall that sent shockwaves through the industry. Led by Sam Bankman-Fried, the exchange's collapse unfolded over a tumultuous 10-day period, leaving a trail of #mistrust and financial ruin in its wake. ✴Timeline of #Events: #November2022: CoinDesk Exposes #Alameda Research's #Holdings: CoinDesk's report revealed that Alameda Research, closely associated with FTX, primarily held #FTT and other tokens controlled by FTX #insiders instead of #conventional assets. Market #Reaction and Customer #Withdrawals: The leak led to a significant drop in FTT's market #cap, prompting Binance to announce the sale of its #FTT holdings. Scores of investors and customers began withdrawing their funds from #FTX, totaling $6 billion over three days, signaling a crisis. Failed #Acquisition and #Regulatory Scrutiny: Binance CEO Changpeng Zhao announced a #nonbinding agreement to #acquire FTX's non-U.S. unit. However, Binance cancelled the deal citing regulatory #investigations and #mishandling of funds, exacerbating FTX's predicament. #Misappropriation of Funds and Legal Actions: Allegations emerged that FTX #diverted billions from customers to finance Alameda's activities and #lavish spending. Subsequently, the U.S. DOJ, #SEC, and #CFTC filed charges against Bankman-Fried for #wirefraud, #moneylaundering, and #securitiesviolations. FTX #Bankruptcy and #Recovery Efforts: FTX declared #bankruptcy amidst mounting losses, with approximately $9 billion in customer assets lost. However, efforts to recover assets during bankruptcy proceedings #yielded about $5 billion. #Legal Repercussions and #Celebrity Involvement: Bankman-Fried and his associates faced legal troubles, with some pleading guilty and negotiating deals. #Celebrities endorsing FTX faced #legal action for nondisclosure of #financial ties. #Corporate Governance Failures: Court-appointed #CEO John J Ray described FTX's corporate governance as the #worst he has seen in his 40-year career,, highlighting the absence of #controls and trustworthy #financial information. #Sentencing and #Asset Forfeiture: Sam Bankman-Fried was sentenced to #25 years in prison for #fraud, #conspiracy, and #moneylaundering. Despite seeking a shorter sentence, the judge ordered Bankman-Fried to forfeit approximately $11 billion in assets, emphasizing the #severity of his actions. Conclusion: The #fallout from #FTX's collapse reverberates far beyond the realms of #finance, underscoring the importance of #regulatory oversight, #transparency, and #accountability in emerging markets.

⚖️ Sam Bankman-Fried’s 25-year prison sentence doesn't reflect a failure of FTX, it reflects a failure of America. ⚖️   Binance’s Changpeng Zhao was recently sentenced to four months in prison rather than the three years recommended by prosecutors, roughly a month after FTX’s Sam Bankman-Fried (“SBF”) was sentenced to 25 years. In SBF’s sentencing, Judge Lewis Kaplan cited that SBF knew what he did was wrong and that he’d got caught. But after listening to “Going Infinite” by Michael Lewis on Audible, it’s difficult not to feel sympathetic towards SBF. My own take – he never should have had the freedom to make the mistakes that he did. The regulators stuck their heads in the sand, and Sam paid the price. Michael Lewis is a phenomenal storyteller and famous for his books on financial crises and behavioral finance, like “Liar’s Poker” and “The Big Short”, many of which have been adapted into movies. 📚 For “Going Infinite”, Michael Lewis was embedded with the FTX team, both before and during the meltdown. He saw the trainwreck from INSIDE the train. This made for an amazing book, which highlighted for me that the failure of FTX was our failure to regulate crypto. 🏛 Some key insights from the book: 📈 SBF is an effective altruist (EA). EA’s core idea is to maximize potential good for the world. This leads many, like SBF, to choose to make as much money as possible just to give it away, since they believe that approach will have the largest positive impact on the world. 📈 Initially FTX could not get a bank account because it was a crypto business. At the start all funds for FTX went to Alameda because they HAD TO. And in the beginning Alameda was the key market maker on FTX because they needed to be. 📈 Why does that matter? Because FTX was a startup run by kids. I've been at a startup that grew at hockey stick graph angles during the early days of China's online game boom— it's messy. I've seen it. 📉 But here, FTX had billions of other people’s dollars, AND they had zero regulatory oversight. Did SBF misuse customer funds? The jury said yes, but if FTX was regulated (like any other financial intermediary) he never would have had that opportunity. The true culprit is the US financial regulatory system – the SEC, Congress – for not regulating an emerging and immensely impactful market. In SBF’s own words, he screwed up, but he never should have had the chance to do so in the way that he did. FTX failed because America failed to regulate FTX. We can do better. It’s time to bring crypto in from the cold before we lock up another of our best and brightest. You can find Michael Lewis’s book, Going Infinite, here (or on Audible, which I LOVE): https://lnkd.in/eg54Acre #SBF #CryptoRegulation #Fintech

⚖️ Sam Bankman-Fried’s 25-year prison sentence doesn't reflect a failure of FTX, it reflects a failure of America. ⚖️   Binance’s Changpeng Zhao was recently sentenced to four months in prison rather than the three years recommended by prosecutors, roughly a month after FTX’s Sam Bankman-Fried (“SBF”) was sentenced to 25 years. In SBF’s sentencing, Judge Lewis Kaplan cited that SBF knew what he did was wrong and that he’d got caught. But after listening to “Going Infinite” by Michael Lewis on Audible, it’s difficult not to feel sympathetic towards SBF. My own take – he never should have had the freedom to make the mistakes that he did. The regulators stuck their heads in the sand, and Sam paid the price. Michael Lewis is a phenomenal storyteller and famous for his books on financial crises and behavioral finance, like “Liar’s Poker” and “The Big Short”, many of which have been adapted into movies. 📚 For “Going Infinite”, Michael Lewis was embedded with the FTX team, both before and during the meltdown. He saw the trainwreck from INSIDE the train. This made for an amazing book, which highlighted for me that the failure of FTX was our failure to regulate crypto. 🏛 Some key insights from the book: 📈 SBF is an effective altruist (EA). EA’s core idea is to maximize potential good for the world. This leads many, like SBF, to choose to make as much money as possible just to give it away, since they believe that approach will have the largest positive impact on the world. 📈 Initially FTX could not get a bank account because it was a crypto business. At the start all funds for FTX went to Alameda because they HAD TO. And in the beginning Alameda was the key market maker on FTX because they needed to be. 📈 Why does that matter? Because FTX was a startup run by kids. I've been at a startup that grew at hockey stick graph angles during the early days of China's online game boom— it's messy. I've seen it. 📉 But here, FTX had billions of other people’s dollars, AND they had zero regulatory oversight. Did SBF misuse customer funds? The jury said yes, but if FTX was regulated (like any other financial intermediary) he never would have had that opportunity. The true culprit is the US financial regulatory system – the SEC, Congress – for not regulating an emerging and immensely impactful market. In SBF’s own words, he screwed up, but he never should have had the chance to do so in the way that he did. FTX failed because America failed to regulate FTX. We can do better. It’s time to bring crypto in from the cold before we lock up another of our best and brightest. You can find Michael Lewis’s book, Going Infinite, here (or on Audible, which I LOVE): https://lnkd.in/eysmhNmR #SBF #CryptoRegulation #Fintech

Cyprus SEC extends FTX Europe suspension to May 2025 - https://lnkd.in/di5q9a6R #cryptocurrency #bitcoin #news #affiliateprogram #affiliatemarketing #DigitalMarketing #Technology #money #blockchain #investing The Cyprus Securities and Exchange Commission has extended its suspension on FTX Europe’s investment firm license, banning the crypto exchange from offering services or accepting any new clients. In a notice published on Nov. 5, Cyprus regulators announced that they have extended the suspension on FTX EU by another six months. This is the fourth time the Cyprus agency has extended its suspensions on FTX EU since the initial suspension on Nov. 11, 2022, which is around the same time FTX in the U.S collapsed. Until the suspension is lifted, currently set to May 30, 2025, the firm is banned from carrying out investment services or activities, taking part in new business transactions, accepting new clients and promoting itself as an investment service. Though, the agency does give FTX EU permission to complete its transactions and return funds and financial instruments to clients. According to the notice, the Cyprus SEC has extended FTX EU’s suspension in order to give the firm time to move forward with the steps needed to comply with the investment and regulated markets laws that are currently in place. Due to the suspension, FTX Europe’s website does not offer any trading options, instead it only lets users log in to see their balance or request a withdrawal. After the FTX declared bankruptcy in November 2022, Cyprus SEC suspended FTX Europe’s license due to the “suitability of the members of the management body” and the need to safeguard client assets. FTX Europe was originally a Swiss startup company named Digital Assets AG, before it changed its name when FTX acquired it for $323 million in 2021. According to a Reuters report, FTX’s restructuring team tried to gain back some of the funds spent on acquiring FTX Europe, stating that the price was a “massive overpayment,” though they ended up settling the dispute by selling FTX Europe back to its original founders for $32.7 million, only slightly more than 10% of its acquisition price. Shortly after being green lit by Cyprus SEC in 2022, FTX EU opened a regional headquarters in Cyprus alongside its main headquarters in Switzerland. Source link

Just finished this book by the author of Liars Poker and Moneyball, about the rise and fall of the crypto-currency exchange FTX and its founder Sam Blankman-Fried. It describes his life, maths focused education, time as a trader, signing up to “Effective Altruism” (EA), then cryptocurrency, establishing FTX, moving to Bahamas, generating enormous financial backing, followed by huge cash inflows often deployed on sponsorships and high risk investments. The author was lucky to be close to the main characters as the business failed and the investigators were called in. This is a book about vision, ambition, enthusiasm, “probabilistic decision making” and courage. It is also about greed, corruption, loss and criminality. Takeaways: 1. SBF has a gift for numbers but no gift for rigor, order and discipline. He has a delusional superiority complex that manages to wrap together innocence, naivety, arrogance and self-consumption. 2. FTX/Alameda were two well-conceived money-making machines that went off the rails due to: too much focus on the code and not enough focus on the ethics, lack of basic controls, and absence of “serious adults in the room” 3. FTX/Alameda and their ventures were driven by the greed of investors, SBF and many of the employees, self-justified by the cloak of “Effective Altruism”. 4. “Effective Altruism” (you need to search) is often the fig-leaf support and justification for greedy people 5. Blindly making “Expected Value” the basis for decision making is dangerous when potential upsides of (low probability outcomes) are huge but the probability of ruin is high. 6. Crypto-currencies and exchanges, and everything associated with them, should be avoided by everybody other than those comfortable with losing 100% of their money. 7. The Liquidation industry is just as greedy: in this case gorging itself on the remnants of FTX/Alameda. Maybe SBF was right when claiming that if he could make sure all stakeholders were made whole. 8. The Regulators need to act more forcefully and promptly to protect the small guy with effective regulation (even thoughI have limited sympathy with those that gambled and lost). 9. Money blinds people. As SBF/FTX splashed the cash, celebrities, the rich and famous and world leaders beat the path to SBF’s door to bask in the reflected glory. This is classic Lewis: he provides easy to understand explanations of a complex subject. His understanding of the financial system combined with his gift for understanding people make for great story telling. As he ends up in the “scene of the crime” - the FTX encampment in Bahamas- he provides a running commentary as the business implodes and the investigators arrive , interviewing the main characters including hours with SBF. The book seems to suffer from “get it out quick after the FTX failure”. It is a bit light weight but easy to read. On the Edge provides deeper technical understanding and is less “reality tv”. 7/10

 The Betrayal: When Dreams Turn to Dust In the world of high-stakes dealings and unforgiving betrayals, reality often mirrors fiction in the most chilling of ways. As I was watching the series "Snowfall," a haunting incident struck a chord, drawing an eerie parallel to a real-life saga involving FTX Exchange and its founder, Sam Bankman-Fried. The series followed Teddy, a seasoned player in the drug business, who took Franklin-Saint from obscurity to immense wealth, amassing a staggering $73 million in profits over the years. Their partnership was built on trust and ambition until Franklin decided to leave the dangerous world behind. The parting seemed amicable, but Teddy had other plans. In a ruthless twist, he emptied Franklin's bank account, leaving him destitute and erasing years of hard-earned success. This haunting narrative echoed eerily in the saga of FTX Exchange. Sam Bankman-Fried had become a beacon of hope in the cryptocurrency world, leading many to prosperity through his platform. Customers entrusted their savings and dreams to FTX, believing in its promises of growth and security. However, like Franklin's fatal mistake, many customers overlooked a crucial principle: "Not your keys, Not your Crypto." They entrusted their funds to FTX without holding their private keys (Well, no private keys in Centralized exchanges), a decision that would later prove disastrous. As the story unfolded, FTX faced tumultuous times. In a shocking turn of events, Sam Bankman-Fried made decisions that wiped out accounts, leaving many who had worked tirelessly back at ground zero. The dreams of prosperity turned to dust as FTX customers realized the painful truth: they had allowed someone else to hold the keys to their futures. In a bid to capture the essence of this tale, I decided to try out my video editing skills, creating a poignant meme video that echoed the rise and fall of FTX Customers. FTX is supposed to mark its five-year in 2 weeks, the memories of its successes and failures in Africa linger, a cautionary tale of trust, betrayal, and the high cost of misplaced faith. I miss FTX Exchange, one of the best developed to date, and everyone who contributed to its success in Africa. #FTXFiveYears #BetrayalInHighStakes #SnowfallEchoesReality #FTXExchangeSaga #TrustAndBetrayal #CryptoCautionaryTale #NotYourKeysNotYourCrypto #DreamsToDust #FTXFiveYears #TrustFall #Cryptocurrency #BitcoinHalving

Almost all FTX account holders are set to receive more than 100% of their original claims according to a reorganization plan submitted by the bankrupt exchange. FTX disclosed that it amassed approximately $15 billion from liquidating Alameda Research's VC investments. This amount is enough to reimburse 98% of FTX creditors who hold claims of $50,000 or less at a rate of 118 cents on the dollar. Remaining creditors will receive no less than 100 cents on the dollar. The exchange's collapse in November 2022 wiped out an estimated $200 billion in crypto market capitalization. FTX founder Sam Bankman-Fried (SBF) has since been sentenced to 25 years in federal prison. “We are pleased to be in a position to propose a Chapter 11 plan that contemplates the return of 100 per cent of bankruptcy claim amounts plus interest for non-governmental creditors,” current FTX CEO John Ray III said on Tuesday. Ray previously slammed FTX, which he took over after its bankruptcy, as a "dumpster fire" and "crime scene." FTX also revealed that 99% of its bitcoin and crypto held by the exchange at the time of bankruptcy were unaccounted for so the recent surge in crypto prizes has not materialized. Anthropic was a key asset for the exchange, which sold its shares in the AI startup for almost $900 million this year. FTX's selling of assets into cash is expected to range between $14.5 billion and $15.8 billion. The company owes creditors around $11 billion. Earlier this year, FTX claimed it had $6.4 billion in cash due to a surge in prices of cryptocurrencies under its belt such as #Solana. FTX has since announced it will be functioning off its remaining SOL holdings in an attempt to fetch a higher price than direct sales. The bankrupt exchange's initial liquidation plan was to sell its $7.5 billion worth of SOL at fixed market prices. FTX began selling SOL in March at discounts. One transaction saw the sale of 26,964 SOL at $64 per token - 67% lower than market value at the time. Claimants will vote on the plan once the bankruptcy court approves it, ahead of a final hearing to formally confirm it. Recoveries will be based on #crypto prices at the time of bankruptcy filing.

Lessons from the FTX trial: Regulating CEXs may not be enough to prevent bad actors | OpinionDisclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial. The fallout from the FTX collapse and the accompanying media circus left unexpected and wide-reaching disruption. Still, the truth is that it expedited the realization that centralized exchanges (CEXs) are broken. How we pick up the pieces will have a long-lasting impact on our industry. It is not the role of regulators to prevent another FTX collapse.  Without meaningful change, this new money system will continue to repeat mistakes from the past. Our industry and our emerging... https://lnkd.in/d8agphUH #Actors #Bad #CEX #CEXs #crypto_regulation #DEX #FTX #Lessons #opinion #Prevent #Regulating #Self_Custody._Custodian_Services #Trial

#uptober is coming, frens. absolute mega billions in #dollarinos will become returned to many euphoric FTX account holders on the 8th of october. the #gambler's foresight here is betting on year's long frustrations of being #sidelined combined with #greed, meaning it's a total no-brainer for the majority of capital finding it's way back into #rotation. we're talking #months of distribution. is it enough to kickstart the #bullrun? no, i believe we are in need of a stronger #catalyst for that. however, it will start a process of making the first #waves happen that provide ideal market conditions for #acceleration. "when just 10 percent of the population holds an unshakable belief, their belief will always be adopted by the majority of the society." a resistance zone @ 64k is the #wall in front of us right this moment. will it break through, or face rejection only to break through on the next attempt in the coming days? it's not a question of #if but it's more a question of #when, because that zone is so gonna get smashed. just a matter of time now. 64k has been giving #bitcoin trouble for weeks. once it's broken with a daily close confirmation, our next target will be 68k to 70k and from there we'll see new #alltimehighs pretty soon. in other words, you're entering the #nicer phase of this crazy #bullmarket, which is a time where random #facemelting pumps could happen on a weekly basis. unless a market #blackswan event comes around to nuke this entire market into the ground, that also implies your worryfree #accumulation window has now #closed. spending half year or longer aggressively accumulating means you should "touch grass" and enjoy a well-deserved calmer pace. however, don't even think of #relaxing just yet when the #game has not even begun.

Does the S in SBF stand for sociopath? Bloomberg reports: "Sam Bankman-Fried came up with a lot of ideas to rehabilitate his image and launch a new crypto exchange after FTX went into bankruptcy. Bankman-Fried thought he might “Go on Tucker Carlson, come out as a republican;” “Come out against the woke agenda;” tell people the team running his bankrupt former company “has no idea how to run FTX;” tell people he’s “really glad” the bankruptcy team stepped in and “they’re great.”" He's about as anti-woke as he is woke. There seems to be no narrative he will not consider selling to manipulate observers. Given that he was in the business of selling an asset class based purely on narratives, it should come as no surprise that he regarded his trial similarly as an exercise of marketing a suitable narrative regardless of whether it is true. "In a Google document, which prosecutors attached to a court filing seeking to put Bankman-Fried behind bars for as long as 50 years, the fallen crypto king considered having author Michael Lewis interview him on TV, asking people what to do in a Twitter poll and leaking a document to the press. ... Prosecutors said the Google document helps show that Bankman-Fried is “motivated to launch his redemption narrative” and possibly defraud investors in the future." For future criminals considering a narrative defence, perhaps don't store your conflicting narratives on Google docs? 🤔 And perhaps don't especially label them like SBF? "Applying the maxim that there are no bad ideas in a brainstorm, Bankman-Fried headlined the document: “Note: these are all random probably bad ideas that aren’t vetted; CONFIDENTIAL.”" 🤦🏻 It's probably not a good idea to include a bunch of inconsistent defences in a document. Even if one of them were true, how likely do you think a jury is to believe in it? And an all caps confidential only emphasises you have something to hide. The question remains: how long will the modern idiot Machiavelli spend behind bars? Prosecutors are asking for 50 years (https://lnkd.in/g5RUWTTZ), but I wonder if we should simply slap on an extra 10 for sheer stupidity?