December 15, 2023

Newsletter #215 - Black Swan, Chapter 11

Yo Shitcoiners,

This has been one hell of a week. We imagine the majority (if not all) of you have been affected in some way by the FTX meltdown. In this edition of the newsletter we run through how it all went down. It's a lengthy read, but if you are feeling lost about how we got to where we are now, dig in.

The rumour mill began churning a couple of weeks ago. Many consider this article from Coindesk as the catalyst that started it all. 

In light of the news that FTX may have an FTT related problem, CZ publicly stated publicly that Binance were liquidating all of their remaining FTT.

Speculation ran rife that this was CZ trying to either destroy, or acquire FTX. Sam made a plea for no war…

And Caroline told CZ she’d buy all of the FTT at $22… a tweet that obviously didn’t age well.

The crypto bros thought they had it all worked out.

This week we have seen a massive amount of deleted tweets. One of the first significant ones was from SBF himself. FTX evidently did not have enough to cover all client holdings.

Degens began to speculate on FTT. Open interest went through the roof.

BitMEX, the old guard of perps decided it was time to get in on the action too.

Things were looking a little shaky at this point but the majority of the market remained optimistic, Cobie included.

As the markets reacted it started to look like we were heading for war. Who’s side would you be on?

In a move that shocked the industry it came to light that an agreement was struck between FTX and Binance. CZ was playing 4D chess and won in a few short battles. Gg sir.

As expected, the memes rolled in.

Who is yo fucking daddy!

This deal was not without its issues though. Regulators were taking a closer look…

We were glued to Twitter for days on end. It was almost hard to keep up. This was a few days of very little sleep.

We were optimistic that Sam was putting users first. Bitlord was hopeful that was the case…

Was CZ just playing games? 

Here’s what Arthur had to say about all of the shenanigans by that point.

From selling all of his FTT to telling his staff to not sell at all. This situation was developing fast.

And then, Binance publicly stated that the hole was too deep. Even they would not be stepping in.

Arthur Hayes had more thoughts on the lack of follow through from CZ. In his opinion this meant that FTX were doomed…

His name was Sam Bankman-Fried.

Where was Justin Sun in all of this? He wouldn’t miss getting in on the action would he? In a bid to “resuscitate” FTX he cut a deal to allow TRX trading on FTX, which promptly skyrocketed the price.

Good friend of, Zane Tackett had a tough few days. We are confident that him, like many others who worked at FTX are GMI though.

The community began to react to the shitshow. Here’s what Edward Snowden and some of your favourites had to say.

The situation was starting to hit home for many. How did we not realise that sleeping was a sign of insolvency?

This will go down in the crypto history books.

Cobie and Frank were having second thoughts about the industry. We hope we can keep some of our best and brightest. It wouldn't be the same.

There were so many warning signs. SBF called this phenomenon “bad math” as you will learn a few tweets below in his Twitter explanation.

Sorry, it was "bad math" and "mislabelling".

I guess this mean we made it. Welp.

Here's what SBF had to say. He was "sorry". Reading the full thread is advised.

If you’re worried about your five figs, then spare a though for those who are down eight.

Zane had been feeding updates to us as the situation developed but then he got locked out. The FTX higher ups evidently did not value transparency.

The beauty of crypto is that all of the movements are publicly visible on the blockchain. Word got out that withdrawals were happening, but only to accounts KYC'd in The Bahamas.

Was using this method illegally shortsighted?

And then a new workaround sprung up utilising NFTs.

As the situation developed we all had questions. The only people who could realistically give us what we wanted at this point were the FTX leadership. Here's what Sam was saying internally.

We should have had our doubts.

Rumours began to spread that in fact SBF and Caroline had something going on. This is a simulation.

While in the past this would have been considered wild speculation and expert shitposting, this explanation looks quite likely.

So much adderall and Soylent at those orgies!

Sorry, we didn't clarify which orgies we were talking about...

Word on the street was that FTX was ran by amphetamine addicts. Adderall use was supposedly rife across the company. These are rumours at this point but it would explain a few things.

Caroline had actually spilled the beans over a year ago.

We aren't saying everyone was off their face on amphetamines but there was definitely some usage.

We all started to wonder if SBF was the loveable nerd that the media portrayed. If you're constantly on uppers, you need 24/7 dining.

It became clear that the lines between FTX and Alameda were extremely blurred. We were always told that they were separate entities, but in fact our funds were being used to prop Alameda up.

This is all a little doom and gloom. Here's some light hearted comedy to brighten the mood.

Back to the action. Alameda had reportedly been in trouble for quite some time.

Which button would you press?

You'll own nothing. And you'll be happy.

It appeared Multicoin Capital, one of the biggest investors in the FTX ecosystem were trying to distance themselves.

How do things get this bad? Well, you throw money at tiny venture-stage startups and hope for the best.

And here's LIGMA!

Which of the industry titans is next?

As thoughts went to a plan to get out of this mess, Zane gave us an option that many would probably take at this point.

But alas, FTX had other ideas.

Remember a day ago when Sam said that FTX US was fine?

They were not fine.

The bankruptcy list was huge.

Back to one of the previously fallen crypto giants, Su was calling this.

Now the dust is settling a little, we are learning who got hit. Good friend of, Kevin from Galois took a haircut.

However, his investors are still up. GMI.

BankToTheFuture however are starting to sound like they are on the way out.

YugaLabs supposedly didn’t know they had funds stuck… ouch.

Mr Wonderful also got burned.

In the next twist, word got out that a hacker had gained access to FTX and users should not be opening the website or any of their apps.

Was this an inside job?

We hope we’ll have more clarity soon.

We had to throw this in. Some great editing from Bankless.

This story was getting too big to ignore. The meltdown was being tracked on Twitter and Elon noticed.

He even joined a Twitter Space and gave some insight into his thoughts on SBF, “this dude is full of shit”.

Who’s going to the wedding?

Although we love the transparency, it sounds like some of these tweets are going to come and bite SBF et al in the ass.


This is accurate.

Number keeps going up. It’s just the wrong number.

By this point it was all shaping up to be an epic Netflix production at some point in the future.

Jonah Hill would be a great SBF.

Welcome to the club, Sam.

We end this one with all of us IRL.

The situation is developing. Stay safe out there.