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The real story behind FTX

SBF, CZ, FTX, BINANCE and... Justin Sun!

The full story:

The FTX affair is one for the history books. What has happened in the last few days is something that no one could have imagined. It proves once again that this space is only 10 years old and is full of inexperienced, incorrect and improvised people who made a lot of money in a very short period of time.

In this article we do not want to judge whether SBF did its actions knowingly or unknowingly, whether it secretly had good or bad intentions (although the latest updates push more for the second option). Rather, we want to shed light on the history of the former second most powerful man in the cryptocurrency industry and his rapid downfall.

The Beginning

SBF was born in 1992, attended Stanford University campuses in a family of academics. After studying at MIT, he majored in physics and mathematics in 2014. He then pursued a classical career in finance until he launched Alameda Research, a trading and venture capital firm focused on digital assets.

The beginning of FTX

Incubated by Alameda Research and backed by Binance, SBF and Gary Wang launched FTX, an Antigua-incorporated exchange based in the Bahamas. They began spending heavily on marketing, such as buying the naming rights to the former American Airlines Arena for $135 million and renaming it FTX Arena in 2021. FTX has grown steadily and was already valued at $1 billion at the end of 2019.

The rise of FTX

With the backing of industry bigwigs like Blackrock and Temasek Holdings, FTX has raised $430 million, attracting 69 investors in total, for a valuation of $25 billion in 2021. VIPs such as Tom Brady and Gisele Bundchen jumped on the hype train and took stakes in FTX.

With the acquisition of BlockFi for $250 million, FTX's rise continued, as did SBF's. In August 2022, Alameda Research co-CEO Sam Trabucco announced his retirement and SBF became one of the richest men in the world with a total net worth of $22.5 billion.

In September of that year FTX was awarded the Voyager Digital Assets auction for $1.4 billion, but the facade slowly began to crumble as Brett Harrison, the next employee in a leadership position, announced his retirement.

The Fall

In October 2022, SBF launched a report on its thoughts on cryptocurrency regulation. His statements were met with a strong backlash from the cryptocurrency industry, and SBF went on Bankless to discuss regulation with Erik Voorhees.

And suddenly everything changed quickly. Alameda's balance sheet leaked and showed that it is largely made up of FTX's native token.

CZ, the co-founder and CEO of Binance, announced plans to sell $2.1 billion in FTX holdings, resulting in FTT withdrawals. In exchange, Caroline Ellison, CEO of Alameda, offered to buy CZ's FTTs for $22 per token.

But this game didn't work, the price of the FTT token drops from $23 to $16, and Alameda starts selling SOL to maintain the FTT price.

SBF then tweets that Binance is about to acquire FTX and FTT goes back to $18, but shortly thereafter it drops to $3...

After careful evaluation, Binance decided not to pursue the potential acquisition of FTX.

After that it was the turn of Justin Sun, founder of Tron, who stated in a tweet and interview with Bloomberg UK that he was "ready" to provide billions to safeguard the cryptocurrency landscape by (possibly) taking over the FTX exchange.

As a first step, to "help" users withdraw their funds from FTX, Justin would work with SBF to make TRX, BTT, SUN, JST and HT tokens available by making them 1:1 withdrawable from the platform...let us tell you but it was a real deal with the devil and a mean move. The reason?

Simple, the tokens in question rose up to 500% in the FTX exchange, while outside the platform they priced (still price) the true value. This means that users, after they transferred their capital into the spefici tokens, would subsequently lose more than 80 percent once they were withdrawn and converted in the various exchanges.

If this is called a strategy to help retailers, well, we have something to say about that.

The Bankruptcy

FTX, FTX US and Alameda filed for Chapter 11 bankruptcy in the United States; SBF resigns.

In the space of a week, cryptocurrency exchange FTX went from proposed acquisition by Binance and then Justin Sun to solve its liquidity problems, to filing for Chapter 11 bankruptcy in the District of Delaware.

The "HACKERAGE" and the mystery behind the Balance Sheet.

So far it is estimated that $600 million may have been drained from portfolios as a result of a hack or nefarious behavior by insiders.

The summary balance sheet shown above includes a number of "less liquid" and illiquid items, such as the $2.1 billion token Serum (SRM), which when valued in the market will be worth much less than what is shown in the accounting entry.

There are other odd entries, such as "Anthropic" $500 million; "TWTR" $43.2 million; and "TRUMPLOSE" $7.3 million.

TWTR is obviously the acronym for Twitter, but it is in the illiquid part of the ledger, which is strange because even though Twitter is now a private company, as a shareholder when it was public, if an FTX entity was a shareholder, FTX should have received $54.20 per share for its shares.


The FTX drama was a real disgrace, many people lost their funds: we are talking about ordinary retailers, large companies, investment funds, start-ups and many others, including us. However, this terrible affair reminded us of the main reason why we are in this space and it is called... decentralization.

Many of those who land in this area are driven by the revulsion they have toward centralized power, which is very often unfair and against the interests of users.

Centralized exchanges are nothing more than banks holding crypto assets and that is why one of the greatest truths lies in the following statement, "not your keys, not your coins." Always use centralized exchanges with caution and possibly for a short time, the norm for holding assets should be to use a cold wallet or a decentralized wallet such as metamask.

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