Judge FTX, not Bitcoin

6 min read by Hugh
published 3 weeks ago

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The crypto community is in shambles. Hundreds of people claiming, “they’re out” of the space because of the FTX saga. Others are adamant that it was a black swan event. Except it wasn’t (it may have been set up from the start). Celsius collapsed and filed for bankruptcy. That was supposedly a black swan. Luna and the Terra stablecoin collapsed with a combined market cap of nearly $60 billion USD. That was supposedly a black swan. All of these events occurred in 2022 and more are bound to happen. The common theme being crypto. Not Bitcoin.  

Who’s behind FTX?

FTX “was” an exchange that operated in the US, Australia and other places worldwide – based out of the Bahamas. It was headed by CEO, Sam Bankman-Fried, the ex-multibillionaire who wanted to donate all his money to charity (good guy). A seemingly innocent guy, that gave off weird vibes to Elon Musk, who unfortunately lied to millions of people. A lot. 

His fall started with CZ, the CEO of Binance, who began a light Twitter war. However, there were red flags before that. CZ announced that Binance would sell all of their FTT tokens (nearly $600 million USD at the time), as part of risk management (or because of a hack). This caused the price of FTT to drop – drastically. People thought this play by CZ was to get rid of a competitor. It worked.

Wait, what even is FTT?

FTT is FTX’s own cryptocurrency supposedly the “backbone of FTX“. It was created by FTX, for what? To be honest, we still don’t know. But this drop in price had people worried. FTX had stopped withdrawals briefly, only further increasing fears around the crypto community.  

Luckily, SBF tweeted a thread, saying everything is fine, CZ was just making stuff up. SBF lied on the thread, claiming, “FTX has enough to cover all client holdings” which is probably why it’s deleted. There were issues at FTX, lots of them. Several hours later, FTT still plummeting FTX called on Binance for help with their liquidity problems. It was supposed to be a done deal, things were looking promising for FTX. Until, SBF announced that nearly $6 billion USD worth of withdrawals had happened on FTX, from the 5th to the 8th of Nov. Not a great look for the company. 

Enter the death spiral

Binance pulled out of the deal. The problems at FTX were too large for even Binance to fix, since there was more than a $6 billion USD hole in their balance sheet. When this news came out, fear was seriously mounting. SBF went MIA. 

About 24 hours later, he came to save the day. Another thread, this one titled, “I’m sorry”, where SBF fronted up and owned his mistakes. Except he lied again. 

He said that FTX US was fine. It wasn’t. The next day, SBF filed FTX, FTX US & Alameda for bankruptcy. Remember, the FTX token (FTT) well it turns out that played a major role on Alameda’s balance sheet. Alameda Research being a cryptocurrency trading company founded by Sam Bankman-Fried. Which also had nearly $8 billion USD worth of FTT on their $14.6 billion USD balance sheet. A token printed from thin-air

Tickets to their own show

It doesn’t stop there. On FTX’s balance sheet was a cryptocurrency called Serum. FTX held $2.2 billion USD worth of it, yet its market cap was only $84 million USD. Furthermore, Sam Bankman-Fried co-founded this cryptocurrency. Talk about pumping your own bags. 

Now, if that wasn’t bad enough for the balance sheets, it gets worse. After the bankruptcy papers were released, people found out their crypto was definitely not crypto. It was thin air. Out of $8.8 billion USD worth of customer funds, only 10% were backed by liquid assets. There were ZERO BITCOIN assets on the bankruptcy papers

It gets worse…

They dealt fake Bitcoin. Paper Bitcoin. Bitcoin IOUs. The whole time. 

This stresses the importance of “not your keys, not your coins”. Here at Amber, we recommend that everyone (when they feel comfortable) move their Bitcoin into their own hardware wallet. We’ve even got a guide. However, if you do decide to hold your Bitcoin on the Amber App we want you to know we take Bitcoin custody seriously. 

When our users put their trust in us, to hold and store their Bitcoin, we do it 1-for-1. Amber does not re-hypothecate any of its funds to attempt to bet on upcoming crypto or generate a yield for your Bitcoin. Your Bitcoin is stored in a multi-signature cold wallet. Anytime that you want to take your BTC off Amber, you are welcome to. We encourage it to all our Bitcoiners, when they are ready to take that next step. 

Nothing suss at all…

Sam Bankman-Fried has been speaking about yield for ages. Anytime you see an exchange offering yield, you must question where the yield is coming from. Is it safe? Is it worth it? 

Continuing on with the FTX saga, the story gets weirder. FTX supposedly had backdoor coding in place that allowed SBF to move funds without anyone’s knowledge. Following on, days after the bankruptcy announcement users were “hacked” on FTX. Around $400 million USD worth of funds was drained out of accounts into separate wallets. Seems very suss

Where is SBF now?

Well, people don’t know. There’s rumors that he is now in Argentina, after his private plane was shown on flight radars heading there. Or, he could be perched up in the Bahamas in his $74 million USD worth of real estate (bought through FTX of course). And probably with the Alameda Research CEO, Caroline Ellison. Who is supposedly in a relationship with Sam Bankman-Fried. She’s said a lot of dumb things, but this was the dumbest. Wherever SBF is, or whoever he’s with, a lot of people want him in jail

If you enjoy your conspiracy theories then this story is full of them. WEF connections, weird relationships or even funding the democrats via Ukraine. The best rabbit hole on the FTX story can be found here

Like we mentioned at the beginning, this is not the last time that an event like this will occur. There are already whispers of the next exchanges on the chopping block. Crypto.com, Gate.io, or even Blockfi, if you have funds on these exchanges please withdraw them. Don’t wait. Do it now. USDT also seemed to slip but it might be back on track now. Some people claimed it was Alameda’s doing, in order to make a profit. Whatever the case may be, the crypto landscape is a ruthless place. 

Bitcoin, not crypto

Events like the FTX collapse, highlight why maxis choose Bitcoin – not crypto. While, yes, Bitcoin might have been the first cryptocurrency created, it now exists in a realm of its own.

It is not crypto.

It is not printed out of thin-air. It is not owned by central powers. It is not a yield-farming token. 

Bitcoin is different. Crypto seems to be a replica of the current, broken fiat system. And it’s unfortunate and frustrating that Bitcoin gets caught up in all of the crypto news. However, this news has birthed more Bitcoin-only individuals

Individuals that hold their own keys. Individuals that have a low time preference. 

Just imagine what the price will do when eventually people go to claim all their fake BTC IOUs. Bitcoin is the marathon. Crypto is the sprint. Take your pick. Remember “there is no second best”.

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