Niyuzz

A Bahamas based crypto exchange turned to dust as its entire 32$ Billion dollar valuation became 0 in just a single day!

Not just that its founder Sam Bankman-Fried aka SBF saw his personal net worth turn 0 as well. 

These entire turn of events has led to the crypto market crashing as well.

Twitter peeps popularly known as Twitterati are going crazy as all the events unfolded on Twitter itself.

But don't worry we are here again to make complex more fun and easy for you 😁

The Golden Child - SBF

Samuel-Bankman Fried(also known as SBF) was born in 1992 on the campus of Stanford University into a family of academics. After graduating with a degree in physics and a minor in mathematics from the Massachusetts Institute of Technology, Bankman started working at Jane Street Capital, a proprietory trading firm.

After his 4-year stint as a trader, SBF founded Alameda Research, a quantitative trading firm dabbing in cryptocurrencies. Bankman needed more and realised his new dream was to enable others to trade crypto with him! This is when the entrepreneur-come-investor launched his next venture FTX, a cryptocurrency derivatives exchange.

With two successful companies under his wing, SBF was set to be the next big thing in the crypto world. However, in a turn of events, FTX filed for bankruptcy on 8 November, 2022

The Collapse of Sam’s Golden Eggs

FTX operates on a simple model connecting buyers and sellers. A gas fee is charged with every transaction and, loans are provided to users wanting to bet big. With this simple physics, FTX rose to the second position in leading crypto-trading firms.

However, the mechanics seemed to fail when Binance CEO, Zhao decided to sell his FTT coins due to “recent conflicts”. Following Zhao’s footstep, traders rushed to withdraw $6 billion in a mere 72 hours. FTX didn’t have this amount of funds to give away and on further investigation, an $8 billion which was not in the system got traced.

In a couple of days, Sam’s golden chicken crumbled away into bankruptcy. Following this, Sam Bankman-Fried willingly resigned from the position of CEO.

Is Sam scamming us?

Media houes are convinced that FTX collapsed due to liquidity issue however, this beats common sense! An exchange is merely an intermediatry so returning any fund shouldn’t be an issue. So where did all that booty go?

In an ambitious move, FTX introduced their own coin FTT as soon as the exchange was set up. To prop up the value of the coin, FTX started buying (burning) its token using a portion of it’s actual revenue. At this point, Bankman’s second company owned an undisclosed amount of FTT. Hence, the valuation of Almeda shot up!

By the way, Sam had everyone convinced that these two companies operated independantly up till now. That was till the information got leaked…

*“As of June 30, the company’s assets amounted to $14.6 billion. Its single biggest asset: $3.66 billion of “unlocked FTT.”*

Mis-management?

Sam’s Atom Bomb

Not only has FTX and the FTT coin been effected, but the incident has shaken the entire crypto market. People have lost confidence in the market and as a result ,the value of cryptocurrencies such as Bitcoin has fallen by 20% just this week.

Moreover, other crypto firms like BlockFi have stopped clients from making withdrawls.

This is an especially big blow after fall of TerraUSD and sister Luna in the crypto winter.

Altruism

What’s the weirdest part? The person responsible for what seems like the biggest scandal in crypto, is an altruist.

Google defines altruism as “disinterested and selfless concern for the well-being of others” however, the Urban Dictionary seems to have a more apt definition, “shit that means badasses doing nice things for a while then going back to being cool and black and stuff.”.

I guess Sam right now can be summarised as