Cause: Foreign media broke out Alameda's financial report and questioned debt risks;
on the evening of November 2,
CoinDesk said that according to a private financial document they reviewed, there were FTT tokens issued by FTX of up to US$6.112 billion on Alameda Research's balance sheet. There is nothing wrong with this in itself, but because the FTX Exchange and Alameda Research are both Sam Bankman-Fried companies. That is, Alameda's assets are built on a token consisting primarily of sister companies issued, rather than separate assets like fiat or other cryptocurrencies. As of June 30, Alameda's assets reached US$14.6 billion, its largest single asset: US$3.66 billion in "Unlock FTT", and the third largest entry is US$2.16 billion in "FTT collateral". Of its $8 billion liabilities, there is $292 million "locking to FTT", but the main liability is $7.4 billion in loans. Other important assets on the balance sheet of
include $3.37 billion in “cryptocurrency holdings” and a large number of native tokens for Solana blockchain: $292 million in “unlock SOL,” $863 million in “lock SOL” and $41 million in “SOL collateral.” Other tokens mentioned by name are small-cap tokens such as SRM, MAPS, OXY and FIDA. There is also $134 million in cash and its equivalents and $2 billion in " equity securities investment".
Alameda CEO Caroline Ellison declined to comment on CoinDesk's report, and FTX did not respond to a request for comment. The report was issued and caused panic in the crypto community, as Luna, whose market value reached $40 billion in May 2022, collapsed overnight. The community is panicking whether Alameda will become the next Sanjiang Capital, and is also worried that FTX will misappropriate user assets insolvently. ,
event induction 2: The game with CZ began;
On November 6, Binance co-founder He Yi said: "Binance does not provide unsecured loans, does not participate in transactions, does not buy companies blindly, and does not spend money to sponsor. 20% of FTX's equity has been sold, and he is looking up and doing things with his head down." It implies the previous FTX related operations.
On November 6, in response to the recent financial documents of Alameda Research, Caroline Ellison, co-CEO of Alameda Research, finally responded on Twitter, "The balance sheet circulating online is incomplete, only a part of it is displayed. We have more than $10 billion in total production not reflected in the table. In addition, the balance sheet lists several of our largest long positions, but does not list our hedge positions . Considering the tightening of the crypto credit field this year, we have returned most of the loans so far."
Subsequently, Binance founder Zhao Changpeng tweeted that as Binance exited FTX last year Part of the equity, Binance received approximately $2.1 billion in cash equivalents (BUSD and FTT). Due to recent news, Binance decided to liquidate all remaining FTTs on our books. He also said he would try to do so in a way that minimizes market impact. Due to limited market conditions and liquidity, this is expected to take several months to complete.
tweets against Binance founder Zhao Changpeng, Alameda Research co-CEO Caroline Ellison responded to Zhao Changpeng on November 7 that hopes to minimize the impact of the market on Binance's sales of FTT, and Alameda is happy to buy it at US$22 (the FTT market price at the time).
did not respond to this, but confirmed that the 22,999,999 FTTs monitored on the chain were transferred from unknown wallets to Binance. Sam Bankman-Fried (SBF), founder of
FTX, tweeted that , "A bunch of unfounded rumors have been circulating. FTX's finances have been audited. Although it sometimes slows down the speed of products, it makes FTX highly regulated. FTX has handled billions of dollars in deposits/withdrawals today, and a large number of exchanges between US dollars and stablecoins are underway."
market feedback, at this time, Volkswagen users still believe that FTX has the strength to deal with it, but users in the bear market cannot withstand the storm, and many users choose to withdraw coins and leave the market.
incident induces 3: SBF refutation does not work, and the FTX runs explodes;
According to Ki Young Ju, co-founder and CEO of on-chain analysis company CryptoQuant, as of noon on November 7, FTX's stablecoin reserves have just reached a year-on-year low, so far, at $51 million, down 93% in the past two weeks. At the same time, FTX's ETH withdrawal amount per hour also hit a record high, and FTT's exchange token reserves also reached a historical high, with about 60% of the FTT circulation supply on the exchange.
According to data disclosed by analyst Lookonchain on Twitter , although SBF has withdrawn funds from various places to the FTX exchange, in the past 24 hours, the total value of assets held in the FTX hot wallet address has dropped from about US$2.4 billion to about US$1.8 billion. In addition, all spot ETH and stablecoins in its hot wallet have been cleared.
On the contrary, Nansen data shows that Binance has inflowed $337 million in stablecoins in the past seven days, which is the largest entity inflow of stablecoins, with the current balance of $26.6 billion. Among them, some FTX platform users should have raised assets in panic.
has withdrawn coins, which has also caused the withdrawal process to be longer. FTX official tweeted that we are continuing to process more demands for charge and withdrawal. At present, the charge and withdrawal process is basically smooth, the platform matching engine and other technical links are running smoothly, and FTX is also operating as usual. On-chain situations may occasionally be congested (such as BTC networks), mainly due to the upper node throughput limit, and FTX is accelerating processing. The withdrawal of stablecoins is being processed one after another. Since the bank is not open on weekends, the redemption speed of USD/stablecoin is slightly slower. When the bank is open on Monday, the wire transfer can be restored smoothly.
The farce surrounding FTX continues, with many projects and retail investors worried that Alameda will sell their tokens, so maybe it’s time to quickly review what tokens are available in Alameda’s pocket.
How much funds do they have on Ethereum? By querying data on the Alameda Research chain, its 627 addresses hold approximately $100 million in assets.
data shows that its main assets are USDC (US$17.38 million), WBTC (US$10.89 million), ETH (US$10.24 million), USDT (US$9.18 million), and WETH (US$7.72 million).
On November 8, as the battle between Binance and FTX deepened, today's FTT, which was under heavy pressure, fell rapidly after falling below the 22 US dollar mark. As of about 14:35, the temporary report of 16.97 USDT, with a 24-hour decline of 23.07%. In this giant game of
, in addition to the players who are directly playing against each other, other "directly surrounded" and projects involved in them will inevitably be affected. Among them, the more representative projects include the public chain Solana (SOL) that SBF has vigorously supported, BitDAO (BIT), which has had a token swap protocol with FTX, and the decentralized stablecoin project Abracadabra Finance (MIM), which uses FTT as one of its main collateral assets. The panic in
SOLhtml
SOL is also deepening. Even as the favorable situation is released one after another, the price of SOL is still falling all the way, temporarily reporting US$27.80 at around 15:10, down 15.23% in 24 hours. Rumors are everywhere, , for example, the sudden issue of SOL issuance that is widely circulated today, but in fact, this "additional issuance" is due to the inflation mechanism under the Solana PoS mechanism.
BIT
While FTT dived, BIT also saw a sharp decline, with a drop of more than 20%. Regarding the source of selling pressure, Ben Zhou, CEO of Bybit (the initiator of BitDAO), pointed the finger at Alameda and FTT, suspecting that the latter two were filling the holes by selling BIT - "Someone once promised not to sell the 100 million BITs he held, and Bybit may be deceived."
At the same time, in order to put pressure on Alameda, the BitDAO community also launched an emergency proposal to transfer 100 million BITs to an on-chain address for verification by the BitDAO community in 24 hours, otherwise the BitDAO community will decide how to deal with the 3.3623 million FTT in the vault.
"accusations" against Bybit, Alameda co-CEO Caroline Ellison denied that he was selling BIT and said that he was busy at the moment. When things calmed down, he would give funds to prove .
MIM
Stablecoin MIM is another project that has been seriously affected.
Since FTT is one of MIM's most important collateral assets, when FTT fell rapidly, MIM also showed a certain degree of deaning, and even fell below $0.95 for a while. As of 15:40, as the market short-term stabilized, MIM also rebounded to around US$0.986, but the anchorage has not yet recovered.
According to the mortgage situation of MIM, there are currently about 28.16 million MIMs (15.85%) generated by FTT collateral. Correspondingly, the total value of FTT acting as collateral assets is about US$119 million. From this, the liquidation pain point is about US$6.5 for FTT. It seems that the situation is not too critical at the moment, but because the FTT liquidity in DEX on Ethereum (the main issue chain of MIM) is small (the FTT in the main DEX Sushiswap is only about US$300,000), once FTT accelerates downward, the on-chain prices are likely to deviate significantly, and related risks still need to be vigilant.
incident induces 4: Insolvency of loans, SBF's lies were exposed;
On the evening of November 8, FTX suspended withdrawal requests on Ethereum, Solana and Tron. According to 0xscope, in the past two hours, no assets have flowed out of FTX except for FTX to call 0.12 ETH to the recharge address. Just one hour later, SBF and CZ announced the news of Binance's acquisition of FTX.
incident induces 5: SBF needs help to CZ and reaches an oral acquisition agreement;
At 0 a.m. on November 9, SBF posted a tweet on his social media account:
matters have been in circles, and we have reached a strategic trading agreement with FTX's first investor and the last Binance (waiting for due diligence). Our team is clearing the withdrawal backlog as it is, which will eliminate liquidity tightening; all assets will be covered 1:1. This is one of the main reasons we asked Binance to join. This may take some time to resolve completely, and we apologize for this.
Thank you very much CZ, Binance and all of our supporters. This is a user-centric development that benefits the entire industry. CZ has done incredible work in building a global crypto ecosystem and creating a more liberal economic world, and will continue to do so in the future. I know there have been rumors in the media that there is a conflict between our two trading platforms, but Binance has repeatedly shown that they are committed to building a more decentralized global economy while working to improve relations with regulators. He will do everything well. (Please note that FTX.us and Binance.us are not affected by this at the moment. FTX.us withdrawals have been available, and the assets fully support 1:1 coverage and run properly.)”
10 minutes later, CZ followed:
This afternoon, FTX asked us for help due to severe liquidity tightening. To protect users, we signed a non-binding letter of intent, (Binance) intends to acquire (FTX) completely. We will conduct a complete investigation into this matter in the coming days. There is a lot to cover and it takes some time. This is a highly dynamic situation and we are evaluating it in real time. Binance reserves the right to exit the transaction at any time. As things develop, we expect FTT prices to fluctuate significantly in the coming days.
incident induces 6: The market is not optimistic about this acquisition and involves policy supervision;
's transaction against Binance's acquisition of FTX has attracted the attention of antitrust regulators in various places. According to a CoinDesk article, if local regulators are concerned that the acquisition will restrict market free choices, they have the right to block the major merger and there are strict laws to prohibit anti-competitive practices.
Associate Professor Thibault Schrepel, who specializes in blockchain and antitrust issues, also wrote in his tweet: "Next time, check whether your tweet complies with antitrust laws before posting the message. At this stage, I would not be surprised if CZ tweet was found in an upcoming court document/antitrust lawsuit." Schrepel believes that U.S. law will apply to the case because the transaction affects the entire company, including the U.S. business. It is also reported that the transaction must also be approved by antitrust agencies in jurisdictions such as EU , and they also have the right to block mergers and acquisitions. For larger transactions, if the company is approved "first-hand" it can impose a fine of up to 10% of its turnover. Meanwhile, Steven Adamske, spokesman for US Commodity Futures Trading Commission (CFTCh), said that he is paying attention to the FTX event dynamics, but "no regulatory issues are currently clear."
On November 9, CZ tweeted: Crypto exchanges should not implement a partial reserve system like banks, and all crypto exchanges should disclose reserve certificates. Binance soon began to make reserve proofs and maintain full transparency. Subsequently, OKX announced that it plans to release a reserve certificate within the next 30 days.
What is reserve fund proof?
If I can do one thing to improve the industry, it is to convince every custodian provider in the cryptocurrency space to adopt a regular reserve proof procedure.
Reserve proof means that the custody business holding cryptocurrency should create public vouchers about its reserves and match the proof of user balance (liabilities). In theory:
Reserve proof + liability proof = Solvency proof
The idea is to prove to the public (especially your depositors) that the cryptocurrency you hold in your deposit matches the user's balance. Of course, this is not that simple in practice. It doesn't make much sense to prove that you have controlled some of the funds on the chain, and you can always borrow them on a short-term basis. Therefore, the significance of point-of-time verification is relatively small.
In addition, exchanges may have hidden debts, or creditors require depositors to enjoy priority, especially if they illegally “discriminately” customer assets on the platform. That's why the Wyoming SPDI Act is so important that it clarifies the legal status of depositors relative to the custodian.
On the morning of November 10, Binance official tweeted that Binance has given up seeking acquisition of FTX. Binance made a reversal less than a day after Zhao Changpeng revealed that he had signed a non-binding letter of intent to acquire FTX.
According to WSJ, FTX faces a liquidity gap of up to $8 billion. FTX employees said at least one FTX executive was unable to contact SBF for several days despite multiple attempts. The executive also said that employees did not get information about what was happening inside FTX, but instead learned about new progress from Twitter. The lack of communication has left employees angry and surprised, the person said.
event induces 7: forces in the vortex;
1, SBF (According to the tweet of encrypted V FXHedge, the Bloomberg billionaire index shows that the net assets of FTX founder Sam Bankman-Fried (SBF) has dropped from US$16 billion to US$1. Previously, SBF's net assets were valued at approximately US$16 billion on November 7, down 93.8% from the previous day on November 8 to US$991 million.)
2, FTX employees: Currently Alameda Research held a meeting, all employees resigned, and some employees sent farewell messages to their former VC partners. The career of FTX employees is not only in danger, but their entire wealth will even turn into soil.
3. Institutions: Sequoia Capital , BlackRock, Tiger Global, SoftBank Group , Ontario Teachers' Pension Fund, which has always been among the top five pension funds in Canada, the well-known American rugby athlete Tom Brady and supermodel Gisele Bündchen and his wife are all on the list of FTX's clients, and may suffer losses this time.
incident induces 8: SBF has made every effort to save itself and seek financial assistance;
On November 10, encrypted KOL Cobie posted on its social platform that anonymous users on the telegram provided it with an employee letter posted by SBF on the internal Slack channel of FTX. Cobie has confirmed its authenticity.
This is the explanation and apologies of all employees after Binance confirmed that the transaction of FTX acquisition will no longer be conducted. The $8 billion shortfall has discouraged Coinbase, OKX, and even Binance, which has the largest amount of funds. SBF, whose net worth has shrunk by more than 90% from $19 billion in 3 days, is still looking for Bailout's approach. When the world's second largest crypto trading platform is destroyed in 3 days, this is what the founder wants to say to his employees the most.
On the evening of November 10, SBF issued an internal letter saying: It will assume responsibility and carry out financing for in the next week. It is currently in negotiations with Justin Sun.
Review of Justin Sun's marketing incident:
released at 10 am on November 10th at 10 am on November 10th and is developing a plan to resolve the liquidity crisis with FTX;
released at 2 pm on November 10th at 2 pm on FTX's TRX transaction has been restored and is dealing with withdrawal functions;
released at 5 pm on November 11th and is ready to provide billions of dollars in aid to FTX.
SBF requires help from multiple sources:
According to Axios, FTX has contacted Kraken, a cryptocurrency exchange headquartered in the United States, about potential rescue transactions. Axios said the details of the negotiations were unclear and could continue or break down, adding that both FTX and Kraken declined to comment.
November 11th person news , according to Reuters citing people familiar with the matter, SBF is seeking to raise up to $9.4 billion in bailout financing for FTX. SBF is discussing raising $1 billion from Tron founders Justin Sun, OKX and Tether each, totaling $3 billion; raising $2 billion from multiple investment funds ; the remaining part will come from other investors.
On November 11, White House Press Secretary Karine Jean-Pierre said in an interview with reporters that he would continue to pay attention to the crypto situation. The Japan Finance Agency has ordered the suspension of FTX Japan operations and has developed a "Written Business Improvement Plan". The Japan Finance Agency said in its order: FTX Japan stopped withdrawing funds from customers in the country, but did not specify a recovery date and did not stop new customers from joining the platform. FTX Japan needs to submit a "Written Business Improvement Plan" by November 16, 2022 to resolve the above issues.
incident induces 9: SBF chooses to resign, liquidate FTX and deal with bankruptcy;
On the evening of November 11, FTX, the leading currency exchange in the currency circle, announced that the group's companies have initiated voluntary bankruptcy protection procedures in the United States, and Sam Bankman-Fried resigned from his position as CEO, and John J. Ray III became the successor CEO.
According to the FTX announcement, FTX officially applied for the US Chapter 11 bankruptcy documents and officially declared it to enter the bankruptcy reorganization process.
It is understood that the bankruptcy protection application document shows that the company that was jointly bankrupt and reorganized was not just one entity, but a collective of more than 130 companies (called FTX Group), including FTX Trading Ltd. (also known as FTX.com), West Realm Shires Services Inc. (FTX US), Alameda Research Ltd... and other giant companies.
Note: Some of the previous friction events between
CZ and SBF:
As early as July 7, 2022, CZ and SBF began to mock each other on Twitter. The reason for ridicule is that Voyager declared bankruptcy, but Alameda, as the lender, did not pay back the money to rescue Voyager. Instead, it rescued Sanjiang Capital, which had already gone bankrupt.But then, on September 27, FTX successfully bid for $1.422 billion in Voyager auction, acquiring Voyager.
At the same time, SBF has been actively acquiring troubled cryptocurrency companies since the beginning of this year, acquiring millions of customers and valuable technology at a lower price than half a year ago. In June this year alone, FTX completed two acquisitions: Canadian exchange Bitvo and US securities broker Embed.
FTX business continues to become stronger and its ecological layout continues to expand, and naturally conflicts with Binance's boundaries of interests. From a business perspective, Binance, as a platform for cryptocurrency market to enjoy the largest traffic and reputation, is reasonable to be vigilant against its competitors. From the perspective of risk aversion and investment, it is free to sell its own assets whenever Binance sells its assets, and after a long term holding, it will expose possible black swan risks and choose to liquidate them. This is also a normal operation. The reason for the problems with
SBF and FTX:
For a long time, SBF was "idiotized" by the cryptocurrency market. He is well-known in the following aspects:
• Arbitrage trading
• Founded FTX and Alameda
• Successful investment, such as SOL
, such a huge success, made Sam accumulate impressive net assets at his peak, with a scale of about 10-14.5 billion US dollars.
Recently, FTX has been busy raising huge financing for new projects. Aptos and Sui are two of them.
faced Luna's market chaos, but he still used this situation as a bargaining chip to continue to carry out active expansion plans.
• Balance for $240 million BlockFi
• Bidding for Voyager assets
• Considering bailout Celsius
SBF Has a strong interest in politics, and it proves this by his participation in the upcoming midterm election , which he donated nearly $50 million in this election.
This happened after he planned to donate $1 billion in the 2024 U.S. presidential election (he later withdrew it). Obviously, Sam has political interests.
This happened after he planned to donate $1 billion in the 2024 U.S. presidential election (he later withdrew it). Obviously, Sam has political interests.
Although the public's perception of Sam is becoming increasingly negative, the DCCPA bill marks a real turning point in public perception. The draft bill has been leaked.
Sam seems to have been supporting the bill. But despite his own attempt to play the “good guy” on Twitter, there are obvious red flags throughout the bill, which could pose a major threat to DeFi.
More than one key industry figures have publicly opposed the bill, including the most well-known Bitboy who is working independently.
Erik Voorhees asked SBF’s position in a Bankless interview. This video (already viral) has caused doubts from the crypto community. The loss of
Sam is huge. When people realize that his intentions may be different from the original thoughts, the mood changes. This emotional shift is a precursor to what will happen next and is also the main factor that has led to FUD recently.
On Wednesday, concerns began to emerge when Alameda's balance sheet was leaked. The document reveals that “the net equity in Alameda’s business is actually tokens issued out of thin air by FTX itself.”
