Год выпуска: November 21, 2022
Автор: Bloomberg Businessweek Europe
Издательство: «Bloomberg Businessweek Europe»
Формат: PDF (журнал на английском языке)
Количество страниц: 64
Sam Bankman-Fried’s crypto exchange can’t pay its users. Where did the money go?
The epic unraveling of cryptocurrency exchange FTX.com has delivered many shocks: The $8 billion in liabilities it couldn’t pay, its huge exposure to its own magic-bean digital tokens, the apparent misuse of customer funds and the mysterious unauthorized withdrawal that drained off a chunk of the money that remained. Even so, it could have been a lot worse: Founder Sam Bankman-Fried had been trying to expand beyond crypto enthusiasts to capture the assets of everyday savers and investors in stocks and funds. The music stopped before he could get there.
Until recently, when even some of his top deputies stopped hearing from him for long stretches of time, Bankman-Fried had been focused on creating what one of his executives called an “everything app.” It would handle a person’s total financial life, from crypto to equities to sending cash to friends. Already, FTX.com was offering traders outside the US crypto tokens that mirrored the performancespecific stocks. Its US arm, FTX US, launched equity trading this year.
In May, Bankman-Fried disclosed holding more than 7% of the shares of the popular brokerage Robinhood Markets Inc., leading to speculation that FTX might acquire it. His exchange plastered its name on an NBA stadium and ran a Super Bowl ad starring Larry David, while Bankman-Fried was spending freely on campaign donations and making friends in Congress. He had funding from some of the biggest names in venture capital and money management. With a vibe that was more online brokerage than Bored Аре-and a name that didn’t even nod to crypto, bits or coins-FTX seemed to be normalizing digital assets.
What its customers got instead was a depressingly common crypto experience: wealth that’s been frozen or lost and the sinking realization that they trusted the wrong people. On Nov. 11, FTX.com, FTX US, Bankman-Fried’s crypto hedge fund Alameda Research and about 130 related entities declared bankruptcy. Traders don’t know when or whether they’ll get their money back.
It’s an echo of the failure of crypto exchange Mt. Gox in 2014 and of digital lender Celsius Network Ltd. just a few months ago. “The company and Sam Bankman-Fried seemed trustworthy,’’ customer Justin Zhang, a 34-year-old engineer in Los Angeles, told Bloomberg News. He had $11,000 worth of assets at FTX US. “I thought FTX US was different because of all the regulations put in place, but it’s not.”
In truth, though FTX US emphasized its regulated status, crypto investors in the US lack many of the protections they take for granted with banks or even stock investments. And FTX US was still a relatively small (and supposedly distinct) part of Bankman-Fried’s empire; the far larger global exchange FTX.com was based in the Bahamas, where trading rules are looser. But customers can hardly be blamed for thinking FTX and Bankman-Fried, widely known as SBF, were on the up and up. “SBF had the reputation of being crypto’s legitimate, reliable, good guy,” says Hilary Allen, a law professor at American University Washington College of Law, who’s raised concerns about the risks of crypto. His ventures “were seen as more responsible, more establishment players than most other members of the crypto industry.”
Until they weren't. On Nov. 2, the online news site CoinDesk reported on a leaked balance sheet of Alameda, Bankman-Fried’s ostensibly separate trading firm. The document showed that a significant portion of Alameda’s assets were in a crypto token called HT, which is issued by FTX. The tokens weren’t exactly shares of stock in FTX-their value was that FTX traders could use them for discounts on trading fees and other perks. Yet it was odd to see Alameda, reputed to be one the most sophisticated traders in crypto, amassing a coin its own founder minted from thin air.
Things came apart quickly from there. Rival exchange operator Binance also held a lot of FTT tokens from a past investment in FTX. Owner Changpeng Zhao announced on Twitter that he’d be selling because of “recent revelations.” That sparked the crypto equivalent of a bank run. The value of FTT plummeted as traders rushed to sell it, while FTX was slammed with withdrawal requests. On Nov. 8, Bankman-Fried announced that Binance would be taking over FTX to protect customers’ assets; the next day Zhao pulled out of the nonbinding deal, and it became apparent that FTX.com was in far deeper trouble. It owed billions of dollars more than it could pay.
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скачать журнал: Bloomberg Businessweek (November 21, 2022)