FTX collapse: This weekend saw one of the most devastating and unprecedented financial unravellings of all time. Sam Bankman-Fried’s crypto empire — FTX and Alameda Research — went from being worth US$16 billion to nothing within five days.
Many thought that the FTX saga would start to wind down after the exchange’s CEO Sam Bankman-Fried filed for bankruptcy on Friday afternoon. Little did they know, things would quickly go from zero to 100, with a series of hacks, rumours and conspiracies quickly setting the already-smouldering ruin of FTX ablaze once again.
Here’s a recap of the insanity that unfurled starting Friday night.
FTX gets “hacked” for $650 million
Late Friday night, hundreds of millions of dollars began disappearing from accounts associated with FTX. While FTX had technically been seized by officials looking to liquidate the platform, many commentators agreed that the movements were happening occurring far too late at night for it to be official liquidators.
According to a series of Twitter threads from one of the most credible blockchain detectives in the business, ZachXBT, more than US$650 million disappeared from FTX’s wallets.
Less than two hours after the FTX wallets were attacked, an official message from the FTX Telegram confirmed that the FTX accounts had been hacked. It added that the official FTX website and mobile applications were “now malware” and should be deleted, as any interaction with the site could infect user devices with malicious software.
“FTX apps are malware. Delete them,” read an ominous message. “Don’t go on FTX website as it might download Trojans”.
The FTX collapse: Train wreck
It truly was a train wreck of an evening for anyone with their funds stuck on the FTX platform. As the hysteria reached a crescendo, a growing chorus of rumours began circulating, including one claiming that FTX CEO Sam Bankman-Fried was fleeing the Bahamas on a private jet to seek refuge in Argentina.
Minutes later, a Reuters report surfaced claiming that Bankman-Fried had built a secret, personal “backdoor” into the FTX platform. With many insiders claiming they had no knowledge of the financial misdeeds being perpetrated by Bankman-Fried, the ‘backdoor’ theory may help to explain how Bankman-Fried was able to send roughly US$10 billion to his hedge fund Alameda Research, without altering the other employees at FTX. .
The same evening, Elon Musk sent out a tweet highlighting the fact that the Twitter platform was being used to coordinate much of the investigation of the FTX saga in real time.
Soon after, he joined a Twitter space where he explained that Sam Bankman-Fried had “set off his bullshit detectors in the past”, after Bankman-Fried approached him to help finance the Twitter deal. It has since emerged that others including renowned tech investor Chamath Palihapitiya had similar sentiments:
The organisation responsible for liquidating FTX, the Securities Commission of the Bahamas, denied any involvement in the movement of funds, suggesting that it was in fact hackers or insiders who made off with the funds.
At this stage, it’s too soon to tell if the hack was indeed genuine or evidence of further misconduct by the FTX leadership team. The FTX collapse rumbled on.
Rumours of a “drug-fueled sex cult” surface
Just when everyone thought it couldn’t get any more outrageous, a popular Crypto Twitter account dubbed ‘Autism Capital’ began publishing screenshots taken from the former CEO of Alameda Research, Caroline Ellison’s personal tumblr. The screenshots detailed her journey into polyamory and shed light on the finer details of the sexual practices of the team at FTX.
Adding to the hysteria, a subsequent thread from Autism Capital alleged that Bankman-Fried routinely offered new employees at FTX a variety of stimulants to help improve cognitive performance while at work.
Bankman-Fried has been put under the microscope for appearing extremely jittery in a series of interviews in the days leading up to the FTX meltdown, leading many commentators to believe that he was ingesting large doses of stimulants. Past tweets from Bankman-Fried support the notion that he was a regular user of stimulants.
“We’ve received confirmation that [Bankman-Fried’s] drug was actually Emsam. It is a drug normally used to treat Depression and Parkinson’s disease but also gives performance enhancing and wakefulness effects,” wrote Autism Capital in a subsequent comment.
Overall, things really went insane over the weekend, and there’s no doubt that more drama will continue to surface over the coming weeks, especially as more information on the finances of the 150 plus firms that Alameda Research and FTX were associated with begins to surface.
With that in mind, we’ll leave you with an ominous infographic of all the firms that the Venture Capital arm of FTX, FTX Ventures and Alameda Research provided funding to.
Like a crypto soap opera, the plot keeps thickening. The FTX collapse crashes on.