A Twitter thread by Shaan Puri on Crypto

Nov 09, 2022 · 5 mins read

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Part 1

Here's the 30 second summary of the FTX drama that is blowing up in crypto. 1/ How FTX (a multi billion dollar co) almost died overnight 2/ And why this is a god tier strategic move by @cz_binance

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OK so it starts years ago. Binance was an early investor in FTX

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But FTX starts growing like crazy. They become the #2 biggest exchange Steph curry, tom brady, they cut huge marketing deals. SBF becomes the famous "fro of crypto" https://t.co/KaQyLAR5cw

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They started as friends, now competitors. Binance #1 FTX #2 (coinbase and others are smaller) Binance decides to sell it's stake in FTX. As part of the buyout, they agreed to take $2B of it in "FTT" -- a token that FTX created that it uses for trading fees.

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So now - Binance and FTX are friendly competitors Binance owns a sh*t ton of FTT ($2B) There's not a lot of FTT trading volume (this is important soon)

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Two days ago, CZ comes out and says SBF has been talking sh*t about them to regulators lobbying in a way that would hurt binance So he announces publicly on twitter to his 7M followers that he's going to DUMP his entire $2B FTT stash

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Anyone holding FTT knows this is bad news. $2B of sell pressure would crush price So they start to panic sell Price of FTT drops like 15-20% overnight. Nobody wants to buy FTT (too risky, a whale is about to dump) and everyone wants to sell. Number go down.

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Enter Alameda - the hedgefund/market maker Sam started before FTX They are kings. But news leaks showing the emperor has no clothes They have ~$12B in assets, $7b ish in liabilities...but half their "assets" are in FTT token which is plummeting & illiquid Alemeda might die

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If alemeda is in trouble, FTX might be too. They are sorta sister companies. Market makers on FTX. And possibly hold/trade customer deposits. The relationship has been unclear for years. (achilles heel?)

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But most people think of FTX as a blue chip company. Sam is famous. He's a genius right? They wait for he or alemeda to show they are in good health *narrator* but they were not in good health

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1/3

Source

Shaan Puri @ twitter

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