Original - Odaily
Author - Hao Fangzhou
Editor - Mandy
FTX, once the crypto giant, hit an iceberg last November. This collision triggered a tsunami, which not only annihilated ships in the same sea area, but also brought down a number of related companies, thereby affecting the entire cryptocontinent.
To this day, the aftermath of the FTX case remains unsolved - its scattered broken boards are still like thorns, piercing the skin of every crypto person - reinforcing the regulatory impression of crypto financial risks and admonishing investors not to Not taking chances with the risks of centralized operations, and always warning industry professionals who retain memories of the pain of the next FTX failure.
As one of the largest fraud cases in financial history, the progress of the FTX case can be described as protracted (just because I am in the drama, I am bald after chasing it). Odaily firstBriefly review the latest developments in the past 10 days and preview important nodes in the next 10 days.：
On September 16, SBF (Sam Bankman-Fried, founder/former CEO of FTX) saved an unpublished 15,000-word article on the However the fact is,I did what I thought was right.In addition, the article contained information about SBFs personal relationship with former Alameda CEO Caroline Ellison, noting that Ellisons refusal of SBFs request to prevent Alameda trade hedging resulted in SBF sending one of the meanest words ever said to her. Information.
On September 17, FTX (which took over under CEO John Ray III) said,All affected accounts have been unfrozen and claimants can reapply on the platform。
September 22,US judge bars SBF proposed witnesses from testifying in October trial。FTX sues SBF parents, demanding the recovery of “misappropriated funds.”
In court documents and social media,SBF has repeatedly criticized law firm Sullivan Cromwell for using it as a scapegoat for the FTX collapse, while downplaying his relationship with the exchange.
FTX reminder:September 29 deadline for customers to submit claims。
September 25,ONeill and other former FTX spokespersons filed motion, requesting that the class action lawsuit be dismissed.
On September 26, several lawyers interviewed by CoinDesk said that given the seriousness of the crime and the estimated losses,If found guilty, SBF could spend around 10 to 20 years in prison. However, Judge Kaplan has broad discretion and his opinion will be the final decision.
CoinDesk DisclosureSBF October trial process，Scheduled to begin October 3, estimated to take 6 weeks.
Just in the early hours of this morning, the BBC launched the documentary SBF, the founder of FTXPanorama · Downfall of the Crypto King(Panoramic · The Downfall of the King of Crypto). The Odaily editorial department has finished it in advance. Press the spoiler. With this 90-minute documentary, we will take you to review the past and learn about the new, dig out the unknown details and profile the changes in everyones attitude. .
Horseshoe disease in the spring breeze
Sleeping 5 hours a night, living with 10 roommates in The Bahamas (Bahamas), being worth $22 billion at the age of 29, but wanting to donate it all to charity, and driving a Toyota Corolla because I dont really need a Leboghini. ...This is SBF who has not been famous for a long time under the lens of NAS Daily.
Since when did SBF start to attract attention?
In 2019, he established the crypto exchange FTX and quickly used ithigh-profile marketing strategy, promoting his ideas and ideals to the world.
Recommended by many social media influencers, FTX is regarded as the most useful crypto “stock exchange” and “as safe as a bank.” Many FTX KOLs and Youtubers teach people how to become a millionaire without doing anything.
Not long after, FTX collaborated with a group of top cultural and sports stars across borders, and advertisements placed all over the place began to enter the mainstream field of vision.
“If you don’t believe in encryption, you will miss out.” A cyberspace filled with young people(The familiar FOMO recipe)。
Offline, the Bahamas hosted a lot of parties with big-name DJs, and young FTX users said, “It’s cool,After all, they are a company that can change the world, and they have money to burn.。”
Under such optimism and media guidance, FTX quickly attracted users from 100+ countries. The safe entry posture for many new users is: register - buy some FTT (FTXs platform currency) - sell at a high point - exchange it back for the legal currency of their own country, thereby strengthening their wealth dreams in the bull market.
During the most euphoric period, a whistleblower tried to warn of the risks - The encryption industry is rife with money laundering and fraud. In the documentary, the horse-loving Brother M kept warning people: Crypto is a barbarian. The world, filled with venomous snakes, continues to attract cowboys... My mission is to find those evildoers.
But such a voice was drowned in a stronger sound.
FTX user Brother S claims to do a lot of research before investing. When it comes to investing in or getting involved in a company, people ask a lot of questions: who are you, what are your strengths, and who else has supported you. But no one asked a genius with a Stanford or MIT background these questions.
A well-known story is that SBF was holding video meetings with investors while playing games at the same time. This should have been a bad sign, but it gave Sequoia Capital, BlackRock, etc. the impression of Wait, who is this kid? A genius?
(Odaily note: FTX has raised a total of US$1.8 billion, and the list of investors is not limited to Sequoia Capital, Temasek Holdings, SoftBank Vision Fund, Ontario Teachers Pension Fund, Tiger Global Fund... In January 2022, FTX announced the completion of US$400 million Series C financing, the companys valuation rose to $32 billion. This is the last round of financing announced by FTX and the apex of its valuation.)
SBF had a happy childhood, and his parents taught at Stanford (law professors). He was good at mathematics since he was a child, and went from a gifted school to MIT to study physics and mathematics. True to the stereotypical nerd, he has an overwhelming love for video games.
After the establishment of FTX, the company culture has also been to play games in spare time, shoot short TikTok videos, and occasionally sleep in the office to work overtime, filling the atmosphere of the young people of the era.
Several other core members of the company include:
Gossip Girlfriend Caroline Ellison, an avid Harry Potter book fan, has a complicated relationship with SBF. After SBF claimed to focus on FTX for better public welfare, she took over Alameda Research (an encryption market maker founded by SBF/ Hedge fund/investment institution), become CEO;
Mysterious Asian co-founder and CTO Gary Wang,For details, see FTX was stolen and disappeared: Who is the mysterious CTO Gary Wang?》；
Anthony Scaramucci, a former business partner of FTX (more resoundingly titled the founder of Skybridge Capital), once purchased a large amount of FTT (in early 2022, FTX also purchased 30% of SkyBridge Capital’s shares). He is regarded as the spiritual mentor of SBF. In FTX’s Middle East and He played a significant role in the North American fundraising trip and later invested in the new encryption company of Brett Harrison, the former president of FTX US...
While attracting young people, SBF has not relaxed its other side image to attract the endorsement of old money. Not only is he on the cover of Forbes, representing the crypto industry in conversations about regulation in the U.S. Congress, but he is also the second-largest financial backer behind Biden’s presidential campaign ($40 million to the Democratic Party in the 2022 midterm elections).
It is such a character who, in less than 2 weeks, fell into the abyss and was accused of being the worst fraudster.
A dramatic 10 days in crypto history
On November 2, 2022, Alameda Research stated that it was completely independent from FTT (related financial businesses), arousing suspicion.
On the 6th, Binance CEO CZ claimed to “sell” FTT, quickly triggering FUD.
At that time, everyone was selling, everyone was running, and everyone was telling people around them to withdraw their coins quickly.
Perceptions are extremely important in financial markets, Caroline and SBF took turns to speak out, calm the mood, and tried their best to prove that we are okay.
7th,Withdrawal - Panic - Run forms a death spiral。
SBF called its partners and said it was just a liquidity issue, but within a few hours a second call came, “The problem is more serious than what I just said.”
Afterwards, the former employee representatives interviewed had heard some rumors about the risks of FTX in advance, but they just laughed it off and did not pay attention to it. When they actually faced the Cannot Withdraw page, everyone was confused.
At that time, some insiders pinned their hopes on “selling to Binance.”(Odaily note: CZ once proposed to consider acquiring FTX, but later canceled it.)Because of this, a crypto KOL expressed his opinion: “CZ lit a fire for his biggest competitor and left the rest to the market.”
On the 9th, many people came to give SBF advice and guidance on what to do now. Anthony also flew to the Bahamas to try to provide emergency relief. But the severely underfunded FTX empire is “just filling holes among several of its subsidiaries.”
On the 10th, SBF began to apologize on social media and FTX US applied to impeach SBF.
On the 11th, FTX collapsed completely.
No one lost everything faster than he did.
Everyone pushes against the wall
In front of the camera, an investor said that he put 2.1 million US dollars for housing and childrens education into FTX.
Several other FTX users also calmly told about their trust in FTX and their eventual betrayal.
The victims then transferred their anger, blaming social media and celebrities with high-profile platforms for manipulating investors thoughts and affecting my investment decisions and will the millions of endorsement fees be refunded? Come and repay my hard-earned money.
However, when the topic comesWhy didnt anyone find out in advance?, then the words were unclear and they blamed each other.
Some media said that FTX’s fraudulent behavior is very classic and can be summarized as “misappropriating customer funds for their own use.”
As the relevant investigation progressed, documents pointed out that Alameda Research was not audited, and the report even included such nonsense as such is life. Another piece of evidence shows that three years ago, FTX paid $3.3 million to someone who reported FTX fraud and money laundering as a bribe to stay silent.
The politicians and celebrities that FTX once paid heavily to win over have cut their seats. Republican representatives denied the source of some campaign donation funds and said that FTX also supported the Liberal Party in the same amount.
SBF arrested by Bahamian police on December 12, 2022, a crypto KOL said in the live broadcast: The two happiest moments in my life are losing my virginity and SBF being arrested.
What followed was a long and repeated investigation, reorganization, filing of cases, extradition of relevant executives, insistent arguments with related companies, application to seal the diary of closest friend Caroline (not to be used as evidence in the criminal trial), temporary Release, apology and anger...
Behind the intricate facts lies complex human nature.
When the camera panned to Bahamian residents, some people also gave different evaluations.
An uncle who composed a song for the FTX event said that (FTX) has indeed improved the quality of life for local children in terms of public welfare. Some reporters also commented that aside from its operational failures, SBF can be regarded as a modern-day Robin Hood.
However, more public welfare organizations said that they had not received donations from FTX, speculating that perhaps the order of funding is based on the reputation it can bring to FTX.
Regardless of the evaluation, the fact is that there are still US$1.7 billion in user funds that have not been recovered.
What if I did a lot of good things, but broke a few little rules?
In interviews after the incident (BBC gave a leg-shaking close-up), SBF repeatedly emphasized that it did not consider itself a fraudster and would do its best to compensate victims, and denied that there was a backdoor between FTX and Alameda.(Odaily note: However, on September 12 this year,Court documents confirm Alameda account has special permissions at FTX, one of accounts will not be liquidated。）
By January this year, SBF was less confident and had evasive eyes when being interviewed. His smile, which looked like a kid who had done something wrong, even became a meme material in the community.
Crypto vlogger Tiffany Fong had never interviewed such a celebrity before the FTX incident.
While SBF was at home briefly awaiting trial, Tiffany came to SBFs parents home in California. The house is surrounded by a fence, and SBF wears electronic shackles. SBF occasionally plays chess with reporters who come to interview, and spends more time feeling alone - playing Sudoku in prison and watching Netflix animations when he returns home. The TV series Inside Job, conspiracy workplace.
After talking about the crimes and responsibilities, Tiffany even had a little doubt, could SBF be innocent?
In August this year, the SBF was asked to ban witnesses.
As mentioned at the beginning of the article, October will usher in the most important trial for the FTX case.
As for the entire encryption industry, today, supervision is still trying to find a way to comply, and a large number of professionals are fighting for it. Some people believe that Crypto is like a snake in the Garden of Eden, tempting people to commit original sin, and FTX is just the surface of sin. The tip of the iceberg.
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