• RollCall by Rollfi
  • Posts
  • One week since the FTX collapse: SBF's DMs leaked, missing funds, and much more

One week since the FTX collapse: SBF's DMs leaked, missing funds, and much more

November 18, 2022

GM, and welcome to RollCall by Rollfi!

Got this email from a friend? Subscribe at the link below!

Catch up on the past week in crypto in 10 mins or less. Here's what we're covering today:

  • More comes to light about FTX: SBF's DMs, missing funds, and much more

  • The fallout

  • More from around the web

NEW INFORMATION ON THE FTX COLLAPSE

A lot has happened and a lot of information has come to light in the past week about the lies, deceptions, and fraud that happened at FTX.

Since our last newsletter here's a few things that have happened:

  • Sam Bankman-Fried has been removed and replaced as CEO: John J Ray III, an attorney and former CEO of Enron that was brought in to lead the company through bankruptcy proceedings, is now doing the same thing at FTX.  

  • FTX was reportedly "hacked" for ~$500M: Nearly half a billion in crypto assets were moved off the exchange last week in apparent "hack" as SBF said himself in a leaked DM message with a reporter from Vox. However, it turns out that the Bahamian government had directed SBF to transfer the assets to a digital wallet held by the Bahamian SEC, "for safekeeping." See their statement here.

  • Prior to SBF being removed, FTX tweeted last week that they were facilitating withdrawals for Bahamian customers: the tweet said that they were doing so per Bahamian "regulation and regulators" but Bahamian officials quickly refuted those claims. People began suspecting that because most of the FTX management lived in the Bahamas, they were actually facilitating withdrawals to themselves.

  • Many employees left the company including co-founder Gary Wang (according to SBF)

  • Vox reporter Kelsey Piper released an article with DM conversations with SBF: The DM conversations were shocking in how little remorse was shown by the ex-CEO, how flippant he was about a lack of controls and oversight, and how outright fraudulent he was about the altruistic messaging he claimed to care so much about.

  • FTX just released their Chapter 11 First Day Affidavit: New CEO, John J Ray III is quoted in the document saying "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here." - Coming from the guy that did the bankruptcy for Enron by the way. @Jonwu_ on Twitter provides a nice breakdown of the document here:

THE FALLOUT

As expected, the collapse of FTX is causing ripple effects throughout the industry. Many institutions and individuals held large amounts of assets on FTX. Multicoin Capital and Galois Capital are among those major funds, writing down all of their investments on the exchange to 0 as they will not likely get them back. In a letter to investors this week, Multicoin announced that it is down 55% this month alone.

Aside from investors on the platform, major holdings of FTX & Alameda are now facing severe price declines as they will likely have to liquidate their positions. Solana, a layer 1 cryptocurrency, is down nearly 65% in the last two weeks since the beginning of the collapse.

Beyond that, competing exchanges are rushing to show proof of their reserves, and that they will not face similar liquidity and control issues, although some say it is not enough. Binance shows the biggest of those reserves with over $65 billion in total.

Image courtesy of The Block

Now, crypto lenders Gemini, Genesis, and BlockFi are facing issues of their own. BlockFi is mulling a potential bankruptcy filing, saying that it had significant exposure to FTX and Alameda, while the others are pausing customer withdrawals.

Is this just the beginning of the fallout? Some seem to think so, but only time will tell.

More from around the web(3)

At Rollfi, we're building the payroll & HR platform for the modern workforce.

Our platform can enable your business to seamlessly pay your teams in both cash & crypto. And your company doesn't need to have any crypto to make it happen.

Want to see the platform in action? Click the link below to book a live demo with our founding team. We're super excited to share what we've built and get feedback on how we can improve the customer experience.

Rollfi Inc does not guarantee and is in no way responsible for the accuracy of information provided in this message. All information is provided “AS IS” and with all faults. Data presented here may not reflect all activity in the market.