Thread by @milesdeutscher

Sam Bankman-Fried was once admired as the king of crypto.

Now Alameda and FTX are rumoured to be on the brink of insolvency.

🧵: Here's how it all went wrong for SBF and FTX. 👇

For a long time, SBF was idolised in the space.

Famous for his:
• Arbitrage trading
• Founding FTX and Alameda
• Hugely successful investments like $SOL

Sam accrued an impressive estimated net worth of $10-14.5b at his peak.

In recent times, FTX has been extremely busy leading huge fundraising rounds for new projects.

Aptos and Sui are the two most recent examples.

Sam was invincible.

Despite Luna causing chaos, he used the situation as leverage to continue an aggressive expansion plan.

• Bailed out BlockFi for $240m
• Bid for Voyager's assets
• Considered bailing out Celsius

However, in the background there were some cracks starting to appear.

Eyebrows started to raise when Alameda CEO Sam Trabucco suddenly resigned.

https://twitter.com/AlamedaTrabucco/status/1562519118741323778?s=20&t=acnDUboNVuF4xZDtTqsjUA

Additionally, a month later FTX President Brett Harrison stepped down.

https://twitter.com/BrettHarrison88/status/1574782901748727809?s=20&t=cEW5bs6EogFiJRp8fVzzYw

These resignations occurred just before it was revealed that FTX was facing some legal trouble in the form of a securities regulator probe.

SBF has a clear interest in politics, evidenced by his involvement in the upcoming midterm elections, in which he has donated almost $50m.

https://twitter.com/unusual_whales/status/1587068621448175618?s=20&t=4CjaZvGM-BmsHbfG_uMiaA

This comes after his plan to donate $1b in the 2024 U.S. presidential election (which he later backtracked on).

Clearly Sam has political interests at heart.

Although public sentiment was becoming more negative towards Sam, the DCCPA draft bill marked a real turning point for the public's perception.

A draft of the bill was first leaked online.

https://twitter.com/lex_node/status/1582814734587265024?s=20&t=NZKusxIpbxNHN1brV5m9UQ

Sam has seemingly been supporting the bill.

But despite Sam trying to play the "good guy" on Twitter, there were clear red flags throughout the bill which could pose significant threats to DeFi.

https://twitter.com/SBF_FTX/status/1584095445185622016?s=20&t=73K61bFe8hKCpGpt2vAcYw

Multiple key industry figures have spoken out against the bill, most notably Bitboy, who is working on his own.

https://twitter.com/Bitboy_Crypto/status/1586406345879695360?s=20&t=gj97jLBUvw7RQavF8jeneg

Erik Voorhees famously quizzed SBF on his stance during a Bankless interview.

This clip (which went viral) led to continued skepticism amongst the crypto community.

https://twitter.com/artofbagholding/status/1586117772005605376?s=20&t=ljcT4ec8kGYhF2MyqMq6Tw

The public damage for Sam was immense.

Sentiment shifted as people realised his intentions may be different from what was first thought.

This shift in sentiment was the precursor for what was to come next, and a major contributor behind the severity of the recent FUD.

Concerns started to bubble on Wednesday when Alameda's balance sheet was leaked.

It revealed that "the net equity in the Alameda business is actually FTX’s own centrally controlled and printed-out-of-thin-air token" - Cory Klippsten.

.@DylanLeClair_ did a great thread breaking down some of the concerns surrounding the balance sheet.

https://twitter.com/DylanLeClair_/status/1587890966580658177?s=20&t=6UAXaE9JzC5DT60kFwiAqg

One of the accounts that first called Celsius' collapse published a report titled "Is Alameda Insolvent?"

The report labelled Alameda's situation as "precarious to say the least."

https://twitter.com/MikeBurgersburg/status/1588481507412279296?s=20&t=HNe97y_T3LjisghNs19gSg

More rumours started proliferating, and the FUD machine entered full force.

Allegations of FTX's insolvency started circulating.

https://twitter.com/DU09BTC/status/1589135270103773184?s=20&t=WIEbzaYwTH6Nx3fMIuXz2g

Then, we saw a MASSIVE $584m worth of $FTT transferred to Binance.

https://twitter.com/whale_alert/status/1588896207795011585?s=20&t=7ekQL8r_pBiaitHYrixVYw

CZ confirmed that is was in fact Binance who executed the transfer.

https://twitter.com/cz_binance/status/1589329217874931712?s=20&t=t2ePHaVHUNag3tyGl4snZQ

We got full confirmation that Binance was exiting its $FTT position yesterday, when CZ announced his decision "to liquidate any remaining FTT on our books."

https://twitter.com/cz_binance/status/1589283421704290306?s=20&t=qijBHE_po1au11YaAMaAzw

CZ fired shots at Sam, stating that they were selling as a result of "learning from $LUNA".

CZ indirectly referenced SBF's lobbying by claiming that he "won't support people who lobby against other industry players behind their backs."

https://twitter.com/cz_binance/status/1589374530413215744?s=20&t=RoYwctWcQjQGJdN850_Uvw

FTX's primary token $FTT dumped as a result, dropping 15% from its weekly highs.

However, it has found strong support around the $22 region.

Caroline, the CEO of Alameda Research, was forced to issue a response to CZ's sale.

In my opinion, this response felt desperate and was somewhat of a red flag.

We all know what happened last time someone tried to "steady" the ship.

https://twitter.com/carolinecapital/status/1589287457975304193?s=20&t=9ayUbYHwyQf-0Iaioe7Rmg

$FTT isn't the only worry though, Alameda holds many more tokens which could be subject to downside pressure if the situation worsens.

https://twitter.com/lookonchain/status/1589578509609205762?s=46&t=7UzRFXxI7v_qPPKajSfIMA

The FUD surrounding FTX has resulted in staggering outflows, as people rush to withdraw funds.

The threat of a "bank run" was looming yesterday as some people were forced to wait 4 hours to process withdrawals.

https://twitter.com/mrjasonchoi/status/1589541601801801729?s=20&t=lwJ05sSgi9PtDDdqMCjYUQ

Sam recently issued a response stating that FTX is fine and assets are fine.

https://twitter.com/SBF_FTX/status/1589598284322328579?s=20&t=ZuUzxv7c9LCVLHyVS6WwlA

However, I'm treating the situation with caution as when there's smoke, there's often fire.

The chances of FTX being insolvent are quite slim, but why take chances in crypto when there's viable alternatives.

I hope you've found this thread interesting.

Like/Retweet the first tweet below if you can. 💙

https://twitter.com/milesdeutscher/status/1589631447517655040

As this situation evolves, I'll keep you updated by posting underneath this thread.

So make sure to follow me @milesdeutscher and turn on post notifications to stay updated.

Update #1: Looks like FTX has stopped processing withdrawals.

https://twitter.com/theblock__/status/1589979338979434497

Binance has fully acquired FTX. 🤯

https://twitter.com/cz_binance/status/1590013613586411520

Binance has the discretion to pull out of the deal at any time, but their intention is to fully acquire FTX as per the terms of the LOI.

FTX withdrawals still aren’t processing as uncertainty looms surrounding the Binance acquisition.

It’s a dark day for crypto and I feel for all those affected. 😞

This thread breaks down what happened in a technical sense.

https://twitter.com/jonwu_/status/1590099676744646656

It looks like the deal is on the brink of falling through. 😬

https://twitter.com/tier10k/status/1590366966317211651

It’s official. The deal is off.

https://twitter.com/tier10k/status/1590444221525278721