This Week in Crypto Twitter: FTX Crash in Tweets


Illustration by Mitchell Preffer for Decryption

This week, the cryptocurrency industry witnessed one of the most sudden and devastating fortune contractions in financial history. Sam Bankman-Fried’s 16 billion dollars The empire built through the exchange FTX and hedge fund Alameda Research collapsed within five days. 130 affiliated companies together with this.

Of course, that was all Twitter could talk about. The world’s favorite microblogging platform was not only an important channel for people to voice their opinions on the issue, but also served as both a battleground and a bulletin board as the crisis unfolded.

Covering all the responses in depth is a huge undertaking that is clearly impossible in an article format, so here is a summary of the most important performances from all the main actors and the biggest responses from third parties. industry.

The drama started last Sunday when Binance CEO Changpeng Zhao said the exchange would be canceling all FTT tokens. FTT is the native token of FTX.

A few hours later, Zhao revealed why he did it.

The tweet caused a bank run as customers began to withdraw funds from the stock market en masse. Excellent 6 billion dollars out of FTX within the next 72 hours. To put that into perspective, the exchange typically handled “tens of millions” of withdrawals on an average day.

On Tuesday, it became clear that FTX did not have the liquidity to meet withdrawal requests; The retreat was halted and things got juicy when Changpeng Zhao set to work to escape the exchange.

Bankman-Fried also announced his rescue on his profile at the same time. Further down his thread, he was he thanked his lucky stars He said he has a friend like CZ.

Later that day, Zhao tweeted something that foreshadowed the next day’s events. His feet seemed to be cold.

Then came the shocker on Wednesday:

In a lengthy statement, Changpeng Zhao explained the reasons for the U-turn. He emphasized that he claims none of his actions were part of a “master plan.”

Bankman-Fried stressed that he was trying to find a long apology the next day alternative channels to increase the liquidity needed to make all depositors of the exchange whole. He wrote twenty tweets congratulating Zhao.

The crisis culminated Friday with news that FTX filed for Chapter 11 bankruptcy. Alameda Research, along with the stock’s American subsidiary FTX.US and approximately 130 affiliates will also file for bankruptcy.

Bankman-Fried has now stepped down as executive director and will be filled by veteran bankruptcy attorney John J. Ray III. Ray previously steered Enron through bankruptcy proceedingsβ€”an apt parallel.

That day, DeFi project Palladium CEO Shiv Shrivastava saw a bittersweet symbol of Bankman-Fried’s collapsed empire from his balcony.

The industry is responding

During the week, several crypto companies denied any association with the blocked FTX, including Coinbase, Circle and Tether.

Coinbase CEO Brian Armstrong announced said his company has no exposure to FTT tokens or FTX or Alameda. Armstrong blamed FTX’s liquidity problems on “risky business practices, including conflicts of interest between closely related entities and misappropriation of client funds.” And he said lack of regulatory clarity It directed consumers in the US to offshore exchanges such as FTX based in the Bahamas.

Jeremy Allaire, co-founder and CEO of stablecoin issuer Circle, denied exposure to FTX. He agreed with Armstrong and saw the crisis as a temporary blip on the path to wider adoption of cryptocurrency and its transformation into something useful rather than speculative value.

Jesse Powell, the former CEO of the Kraken exchange, had very harsh words about Bankman-Fried and its venture capital investors.

An early victim of Crypto Winter, Su Zhu Bankman-Fried, co-founder of crypto hedge fund Three Arrows Capital (3AC), wanted to know he wasn’t alone.

Notorious whistleblower Edward Snowden thinks FTX, along with Binance and Kraken, was a dud from the get-go.

Republican Tom Emmer wanted the public to know that Bankman-Fried is getting help from regulators.

And Twitter CEO Elon Musk said Bankman-Fried had set off a “bs detector.”

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