FTX Collapsed…Here’s Why

crypto Armageddon is here the biggest players in the world are at War they're fighting it out and I'm here to tell you who won and what's next now I'm gonna be honest I called this yesterday I warned you guys that FTX second largest exchange might be insolvent and people called me crazy they said no way the guy who described all of defy as a Ponzi scheme could be bad Sam bankman freed he's just too smart FTX after all is endorsed by Tom Brady what could go wrong with another celebrity endorsement people like Larry David backed

FTX surely your funds are safe Well turns out they were actually in danger all along and things are looking very bad so I'm gonna explain to you this entire mess very quick but bear in mind this is a very Dynamic situation things are changing by the hour but let's get into it once there existed two rival crypto exchanges binance and FTX the number one and number two crypto exchanges and their CEOs CZ and SBF or Sam bankman freed hate each other that's an important part of this story but things were calm at first for the

most part they played nice for years until recently SBF decided to take a pot shot at his competitor's attempts to work with regulators and said uh he is allowed to go to DC right implying that CZ was banned now he didn't know it at the time but SBF set off World War III in crypto with this tweet and he might have signed his own funeral because a few days later a report came out from coindesk leaking ftx's Financial balance sheet and what it showed is that they had a lot of money but it was sort

of locked up in all these token projects they were a part of most notably in ftt token Solana and other projects that they were behind and they couldn't sell the projects anytime they wanted to in other words even though they had billions of dollars worth of assets they weren't very liquid and it was arguable that some of the coins weren't that valuable so they couldn't get access to these funds immediately meanwhile they had huge liabilities of 8 billion dollars 7.4 billion of which were loans now Dirty Bubble media who was the person who caught out

the collapse of Celsius which we've talked about extensively picked this up in a scathing report in it he suggested that FTX and Alameda research might be insolvent because all their money was locked up in these tokens that might be worthless and if everyone tried to withdraw their money all at once the company could likely not pay off their liabilities now CZ saw this and decided to take an opportunity to strike against his biggest rival he announced that day that because of recent Revelations which because of that report quote we have decided to liquidate any remaining

ftt on our books now this was massive given that FTI X's number one holding was ftt their competitor binance is saying that they're going to dump up to 2.1 billion dollars worth of it on the open market causing that price to plummet now all of a sudden you don't even have E-liquid funds you just have none of those funds so even though CZ said that this was not a move against a competitor it kind of looked like it was right of course he's going to say that in reality he knew what he was doing now

immediately this stoked all sorts of fears about the solvency of FTX and the fear spread like wildfire is FTX the next Luna is FTX the next Celsius and people started to withdraw funds like crazy which honestly was The Logical move to make the problem with crypto exchanges right now is that because there's no monetary Insurance on your money even if the probability of an exchange going bust is less than one percent you still have to take all your money out because if they do go bus you lose everything if it doesn't go bust you only

lose a fraction of on trading fees for being cautious and so there's really nothing to risk by taking your money out and there's everything to risk by keeping it in so basically that means Bank runs are extremely common these days and a lot of these exchanges they're really not ready for it in fact Sam bankman freed himself said that a lot of crypto exchanges are secretly insolvent uh which was a bit of weird foreshadowing but at first it looked like FTX wouldn't go and solve and a lot of people said this was very unlikely since

in the past they've looked very strong and that's what they basically said they said look it's no big deal this is all fun nothing to worry about Alameda research who is closely tied to FTX actually responded about these uh leaks in their financial balances and they said quote they have 10 billion dollars worth of assets that aren't reflected there and that also they have returned most of their loans by now and most shocking of all was that they offered CZ to buy all of his ftt off market for 22 each near the current price price

now the reason for this is obviously to show that okay we're not scared we've got the money to back this up and if you really aren't trying to sink us as a competitor you'll be happy to do this private deal get a better price and not impact our price it would save both parties a lot of headache but unsurprisingly because these guys hate each other CZ wasn't having it he said he was going to stay in the free market signaling that he fully intended to squash the price of ftt and he did ftt dropped over

the next 24 hours 30 percent and not only that reports started showing that FTX withdrawals were increasing the bank run really was happening like CZ wanted and this is where we have to go back to alameda's CEO what they said about having 10 billion dollars worth of assets because there's some really key caveats about those claims what are those 10 billion dollars worth of assets are they cash because if they are they're probably fine but if there's something like more ftt token or more of Sam's other projects that he can't sell well that's going to

be a significant problem for them when everybody's running and asking for their crypto back and they just don't have it so questions were flying about what exactly FTX was doing with your money when you deposited it were they just giving it to Alameda research which is sort of acting like a hedge fund and trading with your crypto trying to make a big return or were they keeping your funds safe and just practicing proper risk management well this is where everyone just basically waited with baited breath to see what was going to happen next uh oh

this looks pretty bad they froze withdrawals and at the same time the team basically went totally silent and people commented on how bad this looks on them why aren't they speaking and people started to Circle back to old clips of Sam bankman free describing defy and crypto as basically a Ponzi scheme positively and they wondered how did any of us trust this guy I think of myself as like a fairly cynical person and yep that was so much more cynical yeah I would have described farming like you're just like well I'm in the Ponzi business

and it's pretty good point it didn't any of this require any sort of like economic cases just like other people put money in the box and so I'm going to too and then it's more valuable so they're going to put more money in and at no point in the cycle did it seem to like describe any sort of like economic purpose so yeah things are looking really Grim but if you have your money locked up on FTX and you're clinched up right now take a deep breath um because things look like they might be fine

although it's coming from a very unlikely Source CZ announced only hours after FTX paused withdrawals that they were going to buy them binance was going to buy FTX the number one crypto exchange buying the number two Out quote this afternoon FTX asked for our help there's a significant liquidity crunch to protect users we signed a non-binding Loi intending to fully acquire ftx.com and help cover the liquidity crunch now I I'm at a loss for words this is insane if you're not sure what's just happened CZ basically set his competitor on fire by stoking rumors of

insolvency and then showed up with water buckets later you know basically acting like the hero saving the day he just bought FTX out for likely Pennies on the dollar in a move that's honestly gonna go down as a bit of business genius and also cut throat strategy I mean this was a shark move now in the next few months you're going to see SBF and CZ try to spin this whole thing as if there's no conflict between them and there was never any problems that was just a rumor but don't believe it this beef was

very real only days ago CZ was saying that we won't pretend to make love after divorce and that quote we won't support people who Lobby against other industry players behind their backs so very much these guys did not like each other and one of them just won the war so the fact SBF let himself get bought out by probably the man he hates most in crypto just shows you how badly they must have been short on cash or the crypto that was being withdrawn I mean I promise you they exhausted every other option in fact

reports are already coming out that FTX was courting basically everyone in Silicon Valley seeking more than a billion dollars but that by mid Tuesday the hole in their balance sheet looked to be significantly deeper and in the end they had to sell out to their biggest enemy now what does all of this mean because for one this represents a huge centralization in the crypto space you know everyone wants to be decentralized well the number one buying out the number two is sort of a big problem if that's your goal there also remain huge questions like

how they could have been out billions of dollars in the first place and how exactly they were safeguarding customer funds if suddenly they find themselves at a multi-billion dollar hole in their balance sheet after people actually look to get their money out it seems to be yet another other lesson that you should not trust these crypto exchanges as far as you can throw them and that no matter what their CEOs say about not having to worry about anything there could be significant liquidity crisis that they're lying to you about and on that note I want

to remind you that this deal is non-binding and binance can get out if the due diligence doesn't pan out or if they just don't want to do it so if you're invested in FTX and didn't get your money out when I and others started telling you guys that they were likely to be insolvent it's not time to relax Finance isn't necessarily going to save you and you should explore all your options because your funds might still be in danger if this deal doesn't work out as for FTX us I have no idea what's going on

with you guys as far as I know they just bought out ftx.com although the deal is still pending so who knows what's going on with that this is just a wild end to one of the craziest weeks of crypto World War III basically broke out and a winner was decided the true main character revealed himself so that's basically it I'll see you in a bit I've been working super hard on a big investigation behind the scenes I'll tell you guys more about that later but uh just wanted to keep you up in the loop alright

see ya