at night, the stock exchange was hacked, and Bankman-Frida’s Alameda was run by a 28-year-old Potter fan

In continuation of yesterday’s article with a chronicle of the zeroing of one of the largest crypto-exchanges: the company’s business is by no means getting better. On the contrary: it seems that the speed of her immersion into the abyss of hell and death is only increasing.

Expecto Bankrotum: which, let’s say, hinted at the possible problems of the Alameda in advance

As you remember from my previous article about FTX, the problems initially arose not with the crypto exchange itself, but with the Bankman-Fried Alameda Research hedge fund. Apparently, Alameda was so successful in investing in various crypto prodigies that she lost many billions of dollars on this – and that is why she had to be “rescued” with the money of FTX clients.

If you’re wondering who traded so well in the frantic losses, then let me introduce you to the CEO of Alameda Research, 28-year-old Caroline Allison. Allison loves the Harry Potter books, but it’s not entirely clear what prompted Bankman-Freed to put her in charge of a fund with more than $10 billion in assets. After all, from the investment experience she had only a year and a half internship as a junior trader right after college.

Several videos featuring Allison have been viral on Twitter the other day: if you understand English by ear, I recommend watching, for example, this passage and further this one cutting. She says there, in general, in plain text: “To be honest, I don’t fool at all what is happening and where we are investing – we are pouring huge sums into the most stupid ideas that I don’t understand. Oh yes, and our risk management does not include stop losses to limit possible losses!”

And all her interlocutors on podcasts are like: “Ha ha ha, funny joke, you have a good sense of humor!” And now, probably, they are all looking back: “Wait, she wasn’t joking then, or what ?!”

FTX exchange decided to go bankrupt a little less than completely (despite previous statements)

On Friday, FTX officially filed for bankruptcy under the so-called “Chapter 11”: this means that the company will continue to operate while the new appointed managers try to come up with a plan how to “cure” it further. For the clients of the exchange, this can hardly be called good news: most likely, if they manage to get some money back, then this can happen only after a few years and only partially.

Documents filled out by the exchange show that as many as 130 companies are going to hide under the bankruptcy umbrella at the same time. At the same time, there is not only Alameda itself and the international division of the exchange, but also FTX US, about which Sam Bankman-Fried a day ago wrote on Twitter with caps “FTX US USERS ARE FINE!” (At this point, Morgan Freeman’s voice should be heard off-screen: “In fact, they were not fine …”).

As part of the bankruptcy that began, Sam himself was quickly removed from the post of FTX CEO, and a new manager with the beautiful name John Jay Ray III was appointed instead. Fun fact: it was this Ray III who once ruled the bankruptcy of Enron at the beginning of the 2000s – it was one of the most grandiose accounting scandals in the financial world throughout history.

By the way, about the state of Sam Bankman-Fried himself: if earlier it was reported that it had decreased by 94%, but SBF still had about a billion stashed, now Bloomberg is boldly uses the word “nullified”. I’m worried – who will warm up the curl in the zone, from what means?

FTX appears to have been hacked (this is not a drill)

On the night from Friday to Saturday, more than $ 600 million was transfused from FTX wallets… to someone else’s wallets. On Twitter they write that the money started quickly change to the decentralized stablecoin DAI, which is technically impossible to freeze (unlike centralized stablecoins like Tether, which have already managed to block $46 million worth of FTX coins at the request of the authorities).

The official FTX support Telegram channel seems to confirm that this is a hack – they posted the following message: “FTX has been hacked. FTX applications are infected. Delete them. Do not go to the FTX website, otherwise you may catch a Trojan.”

Personally, I have some doubts about the version of external hackers. Rather, it seems likely that some employees of the crypto-exchange, embarrassed from all sides, decided “the barn burned down – burn the hut!”. Since everyone steals, why not bite off a tidbit for yourself under the guise? ..

Crypto-infection: it is already among us

In yesterday’s article, I wrote that in such situations of large-scale bankruptcies of systemically important players, financiers are most afraid of financial contagion – when the problems of one company along the chain are transferred to its counterparties, they “infect” their partners, and so on. So: not only FTX is starting to cough.

In particular, the crypto-landing company BlockFi froze withdrawal of funds from the accounts of their customers. They write that client funds in the amount of almost $ 4 billion were stored on the ill-fated FTX exchange (which means that it seems that they were reset to zero on a common basis).

A few months ago, Sam Bankman-Fried helped out the then-bursting BlockFi – FTX provided them with a loan of $ 400 million. Then it could be attributed to altruism and the desire to prevent the collapse of the entire crypto-financial system as a whole. But in the light of recent events, there is a feeling that Sam’s goals were somewhat different.

I mean, you’re kind of investing $400 million of your own money to “save” BlockFi. And then you negotiate with this company so that they keep $4 billion of customer funds on your FTX exchange – and they, in turn, can be poured into the sinking Alameda … In general, you get the idea.

It is not yet possible to reliably estimate how many more such crypto companies that FTX or Alameda still owe. This means that new “surprises” on this topic will appear in the next few months almost every day.

Skeletor will be back next week with an update on FTX. If you do not want to miss my next articles, I recommend subscribing to my TG channel RationalAnswer (Well, I’ll be happy too!).