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The rise and fall of FTX, once the world’s third-largest crypto exchange, is now officially the subject of the next Michael Lewis book. The author behind The Big Short and Moneyball had been embedded within FTX for the last six months until the company’s collapse last week.
Central to the plot is a group of 10 allegedly polyamorous millennials led by FTX’s 30-year-old frontman, Sam Bankman-Fried, all living together in a penthouse in the Bahamas.
(FTX’s in-house counselor disputes the orgiastic nature of the cabal, testifying to the New York Times that the team was “undersexed, if anything” and later told Vice that part of his job was finding external dating options for the FTX team.)
There are also supporting characters to this story: The CEO of sister company Alameda Research and on-off girlfriend of Bankman-Fried, 28-year-old Caroline Ellison, has been well and truly doxxed, revealing herself to be a fan of Harry Potter, amphetamines, and polygamy. CTO Gary Wang and director of engineering Nishad Singh were also in the cabal, but have been more careful with their digital footprints, evading the scrutiny of online sleuths on the hunt for blood.
Closer to home, COO Constance Wang, a graduate of the National University of Singapore, has been panned for holding a C-suite position at FTX, having only been an analyst at Credit Suisse before her stint at the crypto firm. Her pleas for more centralization among crypto exchanges at Token2049, in retrospect, foreshadowed the storm that was to come.
Everyone loves a tale of a fallen hero. But Dan Friedberg, FTX’s chief regulatory officer and former lawyer at poker platform Ultimate Bet (UB), appears to be a villain who is yet to emerge. In 2008, players on UB were cheated out of US$50 million by UB’s owner Russ Hamilton, who had “God-Mode” access to the cards of all UB players.
Poker media has unearthed Friedberg’s role in covering up the scandal and helping Hamilton evade legal sanctions.
Other UB lawyers who have since found new shops to ply their trade include Stuart Hoegner, who now works in the regulatory compliance department of stablecoin issuer Tether, and Sanford “Sandy” Millar, who runs a law firm specializing in crypto.
Short-selling investor Marc Cohodes called FTX’s bluff on financial research channel Hedgeye TV nearly a month ago (jump to 34:40 to see him rip the firm apart) and in a follow-up interview on Tuesday revealed that he had alerted Bloomberg’s crypto team in London of FTX’s shenanigans in July but was rebuffed.
“They don’t want to piss off SBF (Bankman-Fried) because they need access, and they passed. And it was ridiculous, and it really pissed me off,” says Cohodes.
What the f*ck happened?
Last week, Binance scrapped an FTX bailout after a due diligence investigation that lasted all of 24 hours, and then FTX stopped all withdrawals before filing for bankruptcy.
Over the weekend, US$600 million was siphoned off from FTX wallets – likely by an FTX employee. The embezzler has since converted US$48 million of that into Ether and was 35th among the top holders of the cryptocurrency, as of Tuesday.
Another US$400 million worth of FTT, FTX’s native tokens, was unexpectedly released into circulation that same weekend, prompting Binance and Huobi to block all deposits of FTT.
Absence of regulatory oversight
What’s next for crypto?
THE BIG STORY
⭐ TO THE STARS
🌙 TO THE MOON
🌏 BACK TO EARTH
STILL A PONZI SCHEME
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