Entities like SBF “deeply sorry” for FTX crash are shorting Bitcoin

The monumental collapse of FTX will go down as one of the biggest corporate scandals of all time. But at least Sam Bankman-Fried or SBF is apologizing. On November 22, the disgraced founder of FTX wrote a letter to his former employees describing his role in the company’s bankruptcy. “I never thought it would happen,” he said. “I didn’t realize the full extent of the margin position, and I didn’t realize the magnitude of the risk posed by a hypercorrelation crash.” Get this: SBF still thinks the company can be saved because “new investors have a billion-dollar genuine interest.” Shouldn’t he be busy trying to avoid jail now?

Bitcoin (BTC) and the broader cryptocurrency market are reeling after the scandal. While this allows many diamond hodlers to pick up more BTC on the cheap, institutional investors are taking advantage of this opportunity to short the market. Finally, we can get this final submission to complete the current four-year cycle.

As always, this week’s Crypto Biz newsletter features the latest high-profile business news from our industry.

In a letter to the FTX team, Sam Bankman-Fried said he was “deeply sorry” for the collapse

SBF’s letter to former FTX employees painted a picture of a deeply regretful founder who managed to squander billions due to excessive margins and poor oversight. He also blamed a “run on the bank” for the recent demise of FTX. For those watching, the banking activity mentioned by SBF was initiated by Binance CEO Changpeng Zhao. He announced on Twitter on November 6 that he will be selling $500 million worth of FTX tokens across all locations. The announcement caused a huge wave of payouts on FTX as users rushed to exit. Within 48 hours, FTX was declared bankrupt.

FTX owes 50 largest creditors more than $3 billion: Bankruptcy filing

The hole in FTX’s balance sheet is estimated to be worth about $8 billion, a large portion of which is owed to just 50 people. New bankruptcy filings in Delaware this week confirmed that FTX’s top 50 creditors owe a combined $3.1 billion. One individual owes more than $226 million, while the remaining 50 owe anywhere from $21 million to $203 million in the failed derivatives exchange. So when can FTX lenders expect to get some of their money back? That could take years or even decades, according to bankruptcy attorney Steven Earel.

FTX crisis leads to record flows into short-term investment products

Those who believe in Bitcoin as a sound money alternative to the current monetary regime have taken advantage of the recent market crash to hoard more BTC. But for some institutional investors, FTX’s collapse has created a new shorting opportunity. According to CoinShares, 75% of institutional cryptocurrency investments last week were in short-term investment products. In other words, they are betting that the price of Bitcoin and other cryptocurrencies will fall further. BTC has already fallen to $15,500, marking a new low for the period. Even though Bitcoin could go much lower, we are nearing the end of the current four-year cycle. So the bottom may be near.

US Senators Urge Fidelity to Reconsider Bitcoin Offerings After FTX Blast

Fidelity Investments, one of the earliest institutional backers of the digital asset, has been strongly urged by members of Congress to limit its Bitcoin investment offerings. This week, Senators Elizabeth Warren, Tina Smith and Richard Durbin again called on Fidelity to reconsider its Bitcoin 401(k) product offering in the wake of the FTX debacle. “Since our previous letter [from July 26, 2022]the digital asset industry has only grown more volatile, volatile and chaotic — all characteristics of an asset class no plan sponsor or retirement saver should want anywhere near,” the senators wrote. Cryptocurrency skeptics may be taking victory laps for now, but Bitcoin is having the last laugh will buy

Before You Go: Could Grayscale Cause the Next Bitcoin Price Crash?

Concerns about Greyscale’s Bitcoin Investment Trust (GBTC) began to grow last week after the company refused to provide on-chain proof of its holdings. Investors are now worried whether Grayscale’s parent company, Digital Currency Group (DCG), will be forced to liquidate some GBTC for its massive holdings on Genesis Global Trading’s balance sheet. What is the relationship between DCG, GBTC and Genesis? In this week’s Market Report, Marcel Pechman and I discuss this relationship and why it matters to Bitcoin investors. You can watch the full replay below.

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