Crypto Biz: Crypto’s day of reckoning has arrived
Who would’ve thought that the implosion of Terra, the collapse of Three Arrows Capital and the bankruptcies of Celsius and Voyager wouldn’t be the most terrible crypto stories of 2022? In retrospect, crypto’s day of reckoning — and the new low for the cycle — hadn’t arrived even after all these tumultuous events.
The industry’s cyclical execution occurred this week when FTX — the world’s second-largest crypto exchange — was feared to be insolvent and on the brink of collapse. Those fears stemmed from FTX’s incestuous relationship with Alameda Research, a trading firm founded by FTX CEO Sam Bankman-Fried — As it turns out, FTX was trading on Alameda revenue to prop up its business, offering its illiquid and useless FTX Token (FTT) for Alameda’s Tether — Amid reports that FTX’s native token comprised roughly 40% of Alameda’s assets, Binance CEO Changpeng Zhao announced that his exchange would liquidate its entire FTT stash. It was the same Zhao, also known as CZ, who offered to buy FTX a few days later to save it from imminent collapse. While Bankman-Fried agreed to the deal, credible rumors suggest that CZ is backing out because of a huge hole in FTX’s finances. (Those rumors have since been confirmed to be true.)
Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won't pretend to make love after divorce. We are not against anyone. But we won't support people who lobby against other industry players behind their backs. Onwards.
This week’s Crypto Biz newsletter isn’t for the faint of heart.
After trying to quell rumors of FTX’s liquidity issues, Bankman-Fried announced on Nov. 8 that his firm had agreed to a Binance takeover — a move intended to ensure that all existing
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