Evidence points to massive fraud and mismanagement https://www.theguardian.com/technology/2022/nov/17/ftx-enron-crypto-collapse-john-ray-unprecedented https://www.theguardian.com/technol...plenty-of-loans-inside-the-crazy-world-of-ftx
Oh man... Among Ray’s other findings: Alameda Research (FTX’s hedge fund) gave Bankman-Fried a $1bn personal loan and a $543m loan to the director of engineering, Nishad Singh. Bankman-Fried often communicated by using applications that were set to auto-delete after a short period of time, and encouraged employees to do the same. Many FTX entities never had board meetings. Because of “historical cash management failures” the debtors do not yet know the exact amount of cash that the FTX Group held. The debtors have been unable to even prepare a complete list of whoworked for the FTX Group because of the chaotic state of its human resources. Many of the employees of the FTX Group, including some of its senior executives, were not aware of the shortfalls or potential commingling of digital assets and may be “some of the people most hurt by these events”.
I wonder if SBF knows in the back of his mind that he's completely fucked and will spend the rest of his life in prison, or if he actually thinks there's a way out of all this?
SBF is a trojan horse, a Fed agent, a government operative sent by the banking cartel, elites and US G to suppress and destroy Bitcoin and cryptos he probably won't spend a day in prison.... or he won't kill himself
He paid big $ of stolen funds to pay the Democrats for his 'get out of jail free' card. Let's see if they honor the agreement now. Apparently, they say he was a 'really nice guy' if you were lucky enough to have met him.
In earlier times Mt. Gox (Japan) also went to insolvency, which was one of biggest at that time, so history in crypto space repeats itself. The next event of that sort will likely come again. It is within the structure how crypto is built, it looks like. In the mean time there are always very frequently major hacks of exchanges to rob ones cryptos. Too all crypto lovers, there is no 100% secure computer system, so it can happen again. https://nomics.com/blog/essays/crypto-exchanges-history https://defirate.com/bankruptcies https://www.forbes.com/sites/nizangpackin/2022/07/15/bankruptcy-and-crypto/?sh=35cf332b7df5 Crypto has been around for more than a decade, but there is little to look at for guidance because things have generally gone well for crypto companies. Aside from crypto lending platform Cred, which filed for bankruptcy in 2020, the only other noteworthy precedent for a crypto bankruptcy case is Tokyo-based Mt. Gox – the largest exchange for BitcoinBTC +0.3% in 2010 that collapsed in 2014; that was a Chapter 15 case (where representatives of a corporate bankruptcy proceeding outside the U.S. obtain access to U.S. courts). After the past few months of a crushing “crypto winter,” the avalanche of filings is on its way. First was Canadian crypto broker and lender Voyager Digital, which was recently forced to hastily file for Chapter 11 bankruptcy in New York, after having suspended account holders from withdrawing assets from their accounts. Voyager had lent $650 million worth of crypto to a hedge fund, Three Arrows, which also went under. Voyager hired the prominent law firm Kirkland & Ellis to represent it in its bankruptcy proceedings, which it filed under duress. In the papers Voyager submitted to the bankruptcy court Voyager argued that it already had a tentative plan of restructuring. According to its plan, account holders would be repaid in the form of crypto “coins” and “tokens”, in addition to proceeds from the litigation with Three Arrows, and some equity in a future reorganized Voyager. Then, several days later, crypto lending platform Celsius, which refers to itself as “a crypto bank” – it charges interest when lending out crypto, and enables crypto deposits to earn their own interest – confirmed that it has initiated Chapter 11 bankruptcy proceedings as well. And if the Terra/LunaLUNA 0.0% stablecoin crash a couple of months ago was not enough to signal that things are about to get ugly (like the Bear Stearns' impending collapse in 2008 that regulators prevented by arranging for a distressed sale to J.P. Morgan Chase) the Celsius collapse has already been labelled by some as a “Lehman Brothers moment” for the crypto industry. With more crypto firms becoming insolvent and filing for bankruptcy, it is now clear that many customers will face massive losses, as their rights to their funds and assets are not clear. This ownership issue was demonstrated in the Cred’s bankruptcy case, where customers did not retain ownership of their cryptocurrency following transfer to Cred. Instead, in that case, the CreditEarn transactions were treated similarly to any other loan in a fiat currency. The ownership issue is also a problem in Celsius’ case. For example, Celsius’ terms of use do not offer any guarantees that user deposits are actually protected in any way in the event of insolvency. The fine print of Celsius’ terms of use makes clear that depositors using its “Earn” accounts that pay interest rates of up to 18%, grant the “crypto bank” ownership of their funds as a condition of use. The consequences are that in the event of a bankruptcy, such account assets “may not be recoverable.” Similarly, although customers that opened Celsius’ “Custody” accounts that do not pay interest keep ownership of their funds, Celsius does not explicitly guarantee that these customers will get their money back in the event of a bankruptcy. Per the terms of use, a bankruptcy proceeding could result in the “total loss of any and all Digital Assets.” ------------------------------------------------------------------------------ The Early Years While Mt. Gox might be the most iconic name among early bitcoin exchanges, it was not the first. That honor goes to Bitcoin Market. On January 5th, 2010, Bitcoin Talk member dwdollar wrote “Hi everyone, I’m in the process of building an exchange. I have big plans for it, but I still have a lot of work to do. It will be a real market where people will be able to buy and sell bitcoins with each other. In the coming weeks I should have a website with a basic framework set up, please bear with me.” A few months later, on March 17, 2010, BitcoinMarket.com went live. Initially, PayPal was used as a means of exchanging BTC for fiat, but as bitcoin grew, so did the number of scammers in the space, eventually leading PayPal to break with Bitcoin Market and leave traders looking for other options. In the months following Bitcoin Market’s launch, numerous other exchanges went live. Without a doubt, the most notable of this wave of exchanges was Mt. Gox, which opened its doors in July 2010. More on that in the next section. During these early years, exchanges were incredibly barebones affairs. They weren’t focused on listing a long tail of altcoins or competing on features with derivative products. They were more or less just trying not to be hacked and lose everyone’s money all the time. For some context, the entire market cap of bitcoin didn’t reach $1m until Nov 6, 2010. The price of a single bitcoin didn’t reach $1 until February 9, 2011. These were early, early days. 2011 saw an uptick in activity. Around the world, new exchanges were opening up to allow local fiat conversion. March saw the launch of Bitcoin Brasil, with Bitmarket.eu following shortly in April. During this time period, there were big issues in payment processing and hacks. Bitcoin Market dropped PayPal in June 2011. A few weeks later, in July of that year, Bitomat lost 17,000 bitcoins. 2012 continued this story. Tradehill, one of the largest US exchanges at the time, shut down in February. Exchanges like Bitcoinica and Bitfloor were hacked. In short, this period was a Cambrian explosion for exchanges. Most would be forgotten by history. Some, like Bitstamp (founded 2011) and Coinbase (2012) would rise to heights later on. But inescapably, the story of this early period of bitcoin exchanges is defined by Mt. Gox. The Gox Years Mt. Gox. One of the most iconic and infamous brands in the history of crypto. It is a story big enough to fill books and one that remains ongoing. The purpose of this section isn’t to provide a full history, but to provide the highlights of the most successful and cataclysmic exchange of its day. The Mt. Gox domain was originally registered by Jed McCaleb (who would go on to help build Ripple and Stellar) as a place to trade cards from the popular game Magic the Gathering (Magic The Gathering Online eXchange), but by July 2010, it had launched as the bitcoin exchange that would go down in infamy. Like all exchanges in that early period, Gox struggled with payment processing. In October 2010, it moved away from PayPal and for a time used Liberty Reserve (yes, the same Liberty Reserve mentioned above). While McCaleb started the site, it wasn’t long before he departed. Gox was sold to Frenchman Mark Karpeles in March 2011. Over the next three years, it would go on to become the biggest bitcoin exchange in the world by a significant amount. At its peak, it handled between 70% and 80% of all bitcoin transactions. This phenomenal success would also set it up for spectacular failure. On February 24th, 2014, Ryan Selkis took to his TwoBitIdiot Tumblr to report disturbing rumblings from Gox. “I have received an unverified report from an otherwise reliable source, which is purportedly from Mt. Gox, the document, which is titled Crisis Strategy Draft, outlines the current situation at the exchange. I trust the authenticity but have work to do to verify the document 100% by myself. I will do so feverishly.” That strategy document started with the sentence “At the risk of appearing hyperbolic, this could be the end of bitcoin at least for most of the public,” and went on to report that a devastating number of bitcoins appeared lost forever. In his post, Selkis went on to say “this is catastrophic and I’m sorry to share this. I do believe that this is one of the existential threats to Bitcoin that many have feared and have personally sold all of my Bitcoin holdings through Coinbase…I believe this will be catastrophic for Bitcoin, both as a currency and as a fledgling industry. If this is a hoax, it is one I am fully blindsided by. I fear however that it is not.” Ryan would not be the last person in the crypto community to find themselves in disbelief. Within a week or two, the rumors proved true and the collective shock registered. The numbers were staggering. Some 850,000 bitcoins – worth $473 million at the time and reflecting 7% of the total supply of bitcoin, had simply disappeared. Somehow, the story kept getting worse. First, as it turned out, Mt. Gox had known about the breach for something like 8 months before going public with it. Second, the actual hack occurred in late 2011. Effectively, someone had figured out how to access exchange wallets and for the next 2 years, in 9 out of 10 instances, coins on Gox were being stolen and sold as soon as they came in. Despite the value of the lost bitcoins being nearly $500 million at the time of the announcement, because they had been sold immediately upon entering the system, it is estimated that the hackers made far less. Mt. Gox went into bankruptcy. Later, Mark Karpeles would be arrested in Japan on a different charge, data manipulation. He would spend a year in jail. There is a final, crazy wrinkle to the sordid affair. After the hack was announced, Gox discovered 200,000 bitcoins that had been sitting untouched in a wallet for 3 years. Because of the intervening increase in the price of bitcoin, those 200k BTC are worth much more today than the claims that have come in (which, unfortunately for creditors, were denominated in USD – not in BTC). Once the claims are paid off, Karpeles could actually receive a windfall. For a person who has gone through an endless parade of lawsuits and death threats, this is a nightmare. There is now a plan to engineer a “civil rehabilitation” where the company comes back from bankruptcy solely to distribute the assets. But that’s a story of now. The more relevant piece for our history of exchanges is the devastating impact of Gox on the industry. The fallout would be a months-long bear market that had begun in the wake of the October 2013 Silk Road shutdown and a fundamentally new disposition for exchanges.
Most f'ed up aspect - there was nothing wrong with the ftx exchange. It worked well and made money. It was the back-door business and Alameda $8bn foot-massaging that wuz da probs. I think a smart investor could buy (or clone) the platform and entice users back with a DEX/ transparently audited funds from a reliable auditor, with a secondary audit check by a client based party.