The Crypto Winter Is About to Become a Crypto Ice Age
<p>The crypto market has <a href="https://www.bloomberg.com/news/articles/2022-11-11/sam-bankman-fried-s-assets-go-from-16-billion-to-zero-after-ftx-collapse" rel="noopener ugc nofollow" target="_blank">just witnessed</a> “one of history’s greatest-ever destructions of wealth.”</p>
<p>I won’t claim to fully understand the complexities of the saga involving the FTX exchange, Alameda Research and recently dethroned Crypto Golden Boy Sam Bankman-Fried. It’s not for a lack of trying; it’s just hard to make sense of things that don’t make sense. But the essential details are as follows:</p>
<ul>
<li>A Coindesk report revealed <a href="https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/" rel="noopener ugc nofollow" target="_blank">Sam Bankman-Fried’s Alameda Research trading firm</a> was heavily invested in the FTX exchange’s FTT token.</li>
<li>Days later, Binance’s CEO announced he was <a href="https://www.coindesk.com/business/2022/11/06/binance-sells-holdings-of-ftx-token-as-alameda-ceo-defends-firms-financial-condition/" rel="noopener ugc nofollow" target="_blank">selling his remaining holdings of FTT tokens</a>. In other words, he was spooked by the fact a huge chunk of Alameda’s assets were tokens from its sister company. <em>Side note:</em> what’re the bets Binance is the next domino to fall?</li>
<li>The FTT token price plunged after the news, and, as always, customers rushed to withdraw their holdings, leaving big financial holes to fill.</li>
<li>Binance suggested it would come to FTX’s rescue until it looked under the covers and got a fright. With no one coming to plug the holes, almost overnight, the exchange became insolvent and has since <a href="https://www.coindesk.com/policy/2022/11/11/ftx-files-for-bankruptcy-protections-in-us/" rel="noopener ugc nofollow" target="_blank">filed for bankruptcy</a>. Sam Bankman-Fried has <a href="https://www.theverge.com/2022/11/11/23453164/ftx-bankruptcy-filing-sam-bankman-fried-resigns" rel="noopener ugc nofollow" target="_blank">resigned</a>.</li>
<li>The exchange then got hacked — <em>totally nothing to see here </em>— to the tune of over $450 million.</li>
</ul>
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