Eight Things We Learned About FTX This Week

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Eight Things We Learned About FTX This Week

The Australian Financial Review2022-11-25

The dramatic collapse of the global crypto exchange FTX, where $US10 billion ($14.8 billion) of customer money was found to have been transferred to another business owned by founder and chief ...

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mightytrader
·2022-12-06
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blut
·2022-11-29
I had said previously . Do your own due diligence. Take all expert opinions with pinch of salt. Discard your herd instincts not. Sometimes we take contrarian stand but do it with research and due diligence. Doing without due diligence is gamblers instinct. When I wrote sometime I made it very simple to understand. I will not confuse anyone with graphs which are totally irrelevant for present situations. Like yesterday's I suggested to long Hk just for yesterday only because I had done my due diligence despite doomsday soothsayer predictions as if the world is coming to an end. I suggested oceanus because I had studied their financials and their businesses strategies. I did also risk management issues. Loses
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  2022-11-29
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- Alex1709:
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  2022-11-29
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Sam Bankman-Fried’s parents and their property portfolioOn Tuesday, official property records showed that Mr Bankman-Fried’s parents – both of whom have plum careers as economic professors at Stanford – bought 19 properties worth at least $US121 million in the Bahamas over the past two years. This includes a $US16.4 million holiday home.The Albany compound in The Bahamas where the  Bankman-Fried family have bought property.Given the average pay at Stanford is about $US185,000 a year for a tenured professor, questions are mounting as to the provenance of their portfolio in paradise.Joseph Bankman is understood to be staying with his son in the Bahamas. Caroline Ellison, the CEO of Alameda Research and Mr Bankman-Fried’s former girlfriend, has been offline since the week of the collapse and is understood to be in Hong Kong.But the relationship between Ms Ellison’s father, Glenn Ellison, who is the head of economics at MIT, and a former MIT colleague, Gary Gensler, who is now the US Securities and Exchange Commission chair, is under scrutiny. Mr Bankman-Fried has previously met Mr Gensler to discuss crypto regulation.As one New York-based crypto hedge fund manager told The Australian Financial Review via Telegram during the week: “If you pull that thread, you might find it’s attached to a Gordian knot of epic proportions. A very sticky wicket.”2. Bahamas officials authorised some of the FTX ‘hack’Two weeks ago $US600 million worth of crypto assets were transferred out of FTX accounts, in what Mr Bankman-Fried and legal representatives called a “hack”.But a statement from the Securities Commission of the Bahamas has revealed that officials had instructed FTX employees to remove $US477 million from the bankrupt exchange on November 12 for “safekeeping”.The Bahamas authorities are concerned that the assets belonging to FTX Digital Markets, the entity incorporated in the Bahamas, might be siphoned off to the United States as part of the broader bankruptcy proceedings.There are three main crypto wallets where the “hacked” money remains. Two are reportedly controlled by the Bahamas authorities.3. Hacker ‘rinsing’ the rest of the FTX moneyI spent most of the week watching the third crypto wallet where the remaining $US200 million mostly held in the cryptocurrency Ether has started to move.Known as the “FTX Wallet Drainer”, this person is trying to sell the Ether without transferring through centralised exchanges. Big exchanges such as Kraken are poised to freeze any accounts this money moves through, and the FTX administrators have warned that money will ultimately be recalled during proceedings.The FTX Wallet Drainer has created 12 new wallets controlled by private keys and is transferring Ether through those, with the objective of converting it into Bitcoin.4. Australian administrator flies to US to negotiate for information accessAustralia is getting involved in the inter-jurisdictional struggle over what money and assets remain.Nearly 30,000 Australians have money tied up in FTX Australia and FTX Express, subsidiaries of the global business FTX Trading. So far, KordaMentha administrators have found $42 million in accounts attached to the two companies but are having trouble extracting information from the international business to better understand which money goes where.So on Wednesday night, a KordaMentha administrator flew from Sydney to New York and will meet with administrators to negotiate access to information to help their investigation next week.Local investors are clamouring for information about their lost money. Brisbane-based exchange Digital Surge has frozen withdrawals for its SMSF customers, and comparison website company Finder closed down its “Earn” product which generated a “fixed” return for investors using an undisclosed method.5. Watching Voyager, Gemini and DCG for ‘crypto contagion’“It’s a waiting game to see where the contagion actually lands,” Jesse Smythe, crypto trader and co-founder of Balmoral Digital, said in Sydney this week.While there haven’t yet been any major exchange collapses just yet, investors are bracing for further damageGenesis Trading, a type of crypto investment bank, said it had $US175 million in its FTX trading account and has had to suspend withdrawals. Another exchange BlockFi is teetering on the edge of bankruptcy, according to The Wall Street Journal.Gemini, an exchange owned by the Winklevoss twins, warned one of its products is exposed to Genesis and withdrawals might be delayed.Coinbase, Binance and Crypto.com have tried to assure investors they have enough money in reserves to withstand a “run”.Digital Currency Group, which owns Genesis, Grayscale Investments and mining company Foundry has tried to calm investor fears as well. DCG owns CoinDesk, the news outlet that broke the story of Alameda’s close relationship with FTX.“We just haven’t fully found out who’s lending to who yet, so we don’t know where the risk is,” Mr Smythe said.6. FTX and Alameda Research lost $US3.7b before 2022The poor performance of the quant trading firm Alameda Research was laid bare this week, after the hearing revealed that $US3.7 billion had been lost in trades before 2022 even started.It’s worth remembering 2021 was a bull market for crypto, and an explosion of speculative interest in NFTs (non-fungible tokens) and high yield-generating products was churning out cash for investors.At the heart of the FTX fraud lies the revelation that FTX transferred $US10 billion in customer money to prop Alameda up, which had been struggling due to lousy performance as well as exposure to the Terra/Luna and Celsius collapse earlier this year.Despite the favourable market conditions last year, it turns out traders under the stewardship of Ms Ellison lost $US3.7 billion across bad directional trades on other investments.One large crypto investor pointed out that, as a market-maker, Alameda could see other people’s trades before they happened.“Even playing on cheat mode they lost,” he said.7. Binance flags $1b fund for distressed digital assetsBinance CEO (CZ) Changpeng Zhao said on Thursday that the company is planning a $US1 billion fund for possible purchases of distressed digital assets in the crypto sector. He also said the company would make a bid for the bankrupt crypto lender, Voyager Digital.Binance has been an enormous beneficiary of the FTX collapse, scooping up trading activity as institutional investors scrambled to re-allocate funds. CZ was instrumental in the FTX downfall, triggering a “bank run” after announcing he planned to sell $US500 million worth of FTT, the token that underpinned the FTX balance sheet.Many have noted his move to buy up distressed crypto assets mirrors Mr Bankman-Fried’s acquisition spree that took place after the Celsius and Terra/Luna collapse earlier this year.8. Bankman-Fried to speak alongside Yellen, Zuckerberg and Volodymyr Zelensky next weekMr Bankman-Fried tweeted he will still appear at the New York Times Dealbook summit on November 30. The FTX founder had been invited weeks ago, and looks set to retain his interview slot with columnist Andrew Ross Sorkin. Onlookers have expressed shock that someone who lost billions in investor funds and is under investigation should appear.Other panellists at the Summit include US Treasury Secretary Janet Yellen, Facebook-cum-Meta chief executive Mark Zuckerberg and Ukrainian president Volodymyr Zelensky, who is spearheading the war with Russia.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9967351786,"gmtCreate":1670279042545,"gmtModify":1676538333366,"author":{"id":"3578530500053907","authorId":"3578530500053907","name":"mightytrader","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":7,"crmLevelSwitch":0,"authorIdStr":"3578530500053907","idStr":"3578530500053907"},"htmlText":"👌","listText":"👌","text":"👌","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9967351786","repostId":2286365181,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9962993061,"gmtCreate":1669688156053,"gmtModify":1676538223483,"author":{"id":"3578973207665480","authorId":"3578973207665480","name":"blut","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0,"authorIdStr":"3578973207665480","idStr":"3578973207665480"},"htmlText":"I had said previously&nbsp;. Do your own due diligence. Take all expert opinions with pinch of salt. Discard your herd instincts&nbsp;not.&nbsp;Sometimes we take contrarian stand but do it with research and due diligence. Doing without due diligence is gamblers instinct. When I wrote sometime I made it very simple to understand. I will not confuse anyone with graphs which are&nbsp; totally irrelevant for&nbsp;&nbsp;present&nbsp;situations. Like yesterday's I&nbsp;suggested to long&nbsp;Hk just&nbsp; for&nbsp;yesterday only&nbsp;because I&nbsp;had done&nbsp;my due diligence despite doomsday soothsayer predictions as if the world&nbsp;is coming to an end.&nbsp;I suggested oceanus because I had studied their financials and their businesses strategies. I did also risk management issues. Loses","listText":"I had said previously&nbsp;. Do your own due diligence. Take all expert opinions with pinch of salt. Discard your herd instincts&nbsp;not.&nbsp;Sometimes we take contrarian stand but do it with research and due diligence. Doing without due diligence is gamblers instinct. When I wrote sometime I made it very simple to understand. I will not confuse anyone with graphs which are&nbsp; totally irrelevant for&nbsp;&nbsp;present&nbsp;situations. Like yesterday's I&nbsp;suggested to long&nbsp;Hk just&nbsp; for&nbsp;yesterday only&nbsp;because I&nbsp;had done&nbsp;my due diligence despite doomsday soothsayer predictions as if the world&nbsp;is coming to an end.&nbsp;I suggested oceanus because I had studied their financials and their businesses strategies. I did also risk management issues. Loses","text":"I had said previously . Do your own due diligence. Take all expert opinions with pinch of salt. Discard your herd instincts not. Sometimes we take contrarian stand but do it with research and due diligence. Doing without due diligence is gamblers instinct. When I wrote sometime I made it very simple to understand. I will not confuse anyone with graphs which are totally irrelevant for present situations. Like yesterday's I suggested to long Hk just for yesterday only because I had done my due diligence despite doomsday soothsayer predictions as if the world is coming to an end. I suggested oceanus because I had studied their financials and their businesses strategies. I did also risk management issues. Loses","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":8,"commentSize":6,"repostSize":1,"link":"https://ttm.financial/post/9962993061","repostId":2286365181,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":104990484,"gmtCreate":1669688526778,"gmtModify":1669688539326,"authorId":3581557670197158,"author":{"id":3581557670197158,"idStr":"3581557670197158","authorId":3581557670197158,"name":"zzgundam","avatar":"https://static.tigerbbs.com/72a957606426aa2583f4b054c436d6f8","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9962993061,"type":1,"supId":0,"prevId":0,"content":"ok","text":"ok","html":"ok"},{"id":104990476,"gmtCreate":1669688500064,"gmtModify":1669688513068,"authorId":4106802244797000,"author":{"id":4106802244797000,"idStr":"4106802244797000","authorId":4106802244797000,"name":"cho__on","avatar":"https://community-static.tradeup.com/news/959df7f1ba95e4fc9ab4f9db0bba5ec8","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9962993061,"type":1,"supId":0,"prevId":0,"content":"<u>Ok</u>","text":"<u>Ok</u>","html":"<u>Ok</u>"},{"id":104990475,"gmtCreate":1669688495922,"gmtModify":1669688508918,"authorId":4088812812352770,"author":{"id":4088812812352770,"idStr":"4088812812352770","authorId":4088812812352770,"name":"Alex1709","avatar":"https://static.tigerbbs.com/b4371c8d3e464d94c77cc0d40b9d3f48","vip":1,"crmLevel":6,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9962993061,"type":1,"supId":0,"prevId":0,"content":"<span class=\"s1\">Yes</span>","text":"<span class=\"s1\">Yes</span>","html":"<span class=\"s1\">Yes</span>"},{"id":104990465,"gmtCreate":1669688443006,"gmtModify":1669688455915,"authorId":3581670987980162,"author":{"id":3581670987980162,"idStr":"3581670987980162","authorId":3581670987980162,"name":"Papa Bear","avatar":"https://community-static.tradeup.com/news/c55a1a3586fa9fd7c8eb6bb015bc678c","vip":1,"currentWearingBadge":{"badgeId":"23f878ed27704312ae41c7f17e73b319-3","templateUuid":"23f878ed27704312ae41c7f17e73b319","name":"Annualised return","description":"Top 20%","bigImgUrl":"https://community-static.tradeup.com/news/1ece4391160b811e6f36b1eea9eb6ea4","smallImgUrl":"https://community-static.tradeup.com/news/7d7540817554a583ac3bf85dea074a4a","grayImgUrl":"https://community-static.tradeup.com/news/8c5460a7cc80dd22560efa26813d947d","redirectLinkEnabled":0,"redirectLink":"https://www.tigerbrokers.com.sg/activity/market/2023/stock-contest?adcode=StockContest2023","hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2023.08.30","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":5300},"crmLevel":7,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9962993061,"type":1,"supId":0,"prevId":0,"content":"thanks","text":"thanks","html":"thanks"},{"id":104990464,"gmtCreate":1669688439452,"gmtModify":1669688451879,"authorId":3579096500575753,"author":{"id":3579096500575753,"idStr":"3579096500575753","authorId":3579096500575753,"name":"Milankaka","avatar":"https://static.tigerbbs.com/288ce834db4366c3536976047323d1ce","vip":1,"crmLevel":6,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9962993061,"type":1,"supId":0,"prevId":0,"content":"<span class=\"s1\">Ok</span>","text":"<span class=\"s1\">Ok</span>","html":"<span class=\"s1\">Ok</span>"}],"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":18,"commentSize":2,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}