On January 1st of 2022, one Bitcoin would cost you about $46,000. By November 8th, that same coin went for about $18,500. And that’s when the year’s most dramatic crypto story was just starting: the ongoing collapse of the FTX exchange, which brought yet another round of existential threats to the crypto industry as a whole.
This year has looked like death by a thousand scandals for crypto. There was the Luna / Terra crash, which wiped out billions in value practically overnight. There was Axie Infinity, the once-hot NFT game that lost $625 million in a hack and has struggled to recover. Celsius collapsed. Three Arrows Capital collapsed. Remember when NFTs were cool and people thought their JPGs were worth millions?
All this happened, of course, as the overall economy began to crash back down to earth after a pandemic-created spike in stock prices — which also dampened society’s overall tolerance for chaotic, nonsensical gambling on internet money. As the economy began to even out and our collective risk tolerance went down, crypto went for many investors from a fun plaything to a dangerous bet.
Crypto has crashed before, and as ever, the HODLers are saying there’s upside left to come. But right now, the future for cryptocurrencies of all kinds looks pretty bleak.
Here’s all our coverage from the ongoing crypto winter:
Sam Bankman-Fried scored $300 million during a big FTX funding push.
The now-collapsed cryptocurrency exchange FTX raised $420 million in a big funding round in October 2021, but $300 million of it went to founder Sam Bankman-Fried, according to The Wall Street Journal.
He apparently sold some of his stake in FTX to get that much, but it still meant he got a lot of money that investors probably wanted to go directly into the company.
FTX would like to make sure you know Sam Bankman-Fried doesn’t work there anymore.
With FTX’s founder and former CEO steadily tweeting away and apparently DMing with Vox reporters (despite a precarious legal status as his former firm attempts to declare bankruptcy), John Ray, the new CEO of FTX, has an important message to share.
Sam Bankman-Fried on the FTX failure: his “single biggest fuckup” was filing for Chapter 11 bankruptcy.
Apparently Alameda took huge losses when Luna went down, and sloppy accounting prevented Bankman-Fried from realizing how bad it was. Also, his meetings with regulators were “PR.”
The House Financial Services Committee is going to look into Binance’s role in FTX’s collapse.
Hey, remember yesterday, when I said Changpeng “CZ” Zhao had painted a target on his exchange, Binance, by helping topple FTX?
Well, the Republican who’s most likely to lead the House Financial Services Committee told The Block that Binance’s role in the debacle will be part of a hearing in December.
FTX’s “company therapist” says he really provided dating advice.
New job perk just dropped: a “career coach” who also serves as the personal therapist for a large swath of the company. From Vice:
In his telling, Lerner worked for FTX not exactly as a therapist and certainly not as a doctor, but as a coach, even as he maintained independent doctor-patient relationships with about 20 employees and prescribed medication to at least some of them.
In this capacity, Lerner said, he was focused on the well-being of the company’s employees, not only concerning himself with their careers, but their personal (and even dating) lives, at times searching out potential “dating options” for company employees in the Bahamas in order to keep them at the company without relying on in-office romance.
BlockFi is preparing for bankruptcy after FTX implodes.
I feel like I’ve been saying “yikes” a lot, but it is my general sentiment about this whole thing. If you’re affected by BlockFi or FTX and want to talk, I’m liz@theverge.com, and I want to hear from you.
Who looks at FTX and sees an investment opportunity?
Sure, it might sound like a bad idea to invest in a bankrupt exchange with more accusations of fraud than anything else we’ve seen on this side of Enron, but the Wall Street Journal reports Sam Bankman-Fried is asking around anyway.
Mr. Bankman-Fried, alongside a few remaining employees, spent the past weekend calling around in search of commitments from investors to plug a shortfall of up to $8 billion in the hopes of repaying FTX’s customers, the people said.
In Mr. Bankman-Fried’s case, the funds aren’t meant to sustain a bare-bones staff, but to repay individual traders and institutional clients who have been unable to get funds out, the people said.
No, FTX was not required to release Bahamian funds first.
On Friday, the bankrupt FTX said it started facilitating withdrawals for its clients in the Bahamas (where the company’s based) at the request of “Bahamian HQ’s regulation and regulators.”
But the Securities Commission of The Bahamas says that’s not the case, stating it never “directed, authorized or suggested… the prioritization of withdrawals for Bahamian clients.” Meanwhile, hundreds of millions of dollars are still missing from the exchange.
BlockFi cuts off credit card customers.
After pausing client withdrawals just a couple of days ago, now BlockFi is shutting off its credit card. In an email sent to customers, it says it’s suspending “purchasing privileges” on the BlockFi Rewards Visa card “in light of recent developments at BlockFi,” but didn’t elaborate any further.
FTX feels the heat.
After FTX filed for bankruptcy on Friday, the Miami Heat announced that it’s terminating its partnership with the company, which acquired the naming rights to its basketball stadium last year.
The stadium will still be known as the FTX Arena when the Heat faces off against the Charlotte Hornets on Saturday (and probably for the foreseeable future) while the team looks to secure a new sponsorship deal.
Is FTX’s founder a League of Legends genius? (No.)
One of the funniest parts of this week’s FTX meltdown was learning that CEO Sam Bankman-Fried apparently blew investors’ minds by playing League of Legends during a meeting.
It was first reported as a bit of gee-whiz startup mythmaking, and in the tradition of Kyle Orland’s brilliant investigation into Travis Kalanick’s Wii Tennis prowess, FT does the vital job of puncturing it by running down his actual history with the game. Turns out he’s a middling-to-bad player and doesn’t really deny it — which is fair! But maybe not a sign of unique genius.
Coinbase is undergoing additional layoffs.
As first reported by The Information, crypto exchange Coinbase is adding to the 1,100 or so people it let go earlier this year with cuts to two other teams.
As confirmed in a statement from the company, they affect the recruiting and institutional onboarding groups, which are shrinking by about 60 people in total.
Coinbase CEO Brian Armstrong tweeted this week that the company isn’t affected by the ongoing FTX flameout and doesn’t engage in that kind of “risky behavior.”
The Department of Justice would like to know how Binance’s due diligence on the now-canceled FTX acquisition went.
So remember when FTX was going to get bought by Binance, except whoopsie, Binance did due diligence for a couple hours and noped out?
US authorities would like to know what Binance saw.
