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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