FTX - The incredible revelations we just heard about - Crypto in Plain English - Episode 299 - by cryptohunt.it

FTX - The incredible revelations we just heard about

Welcome to the Cryptohunt Jam, where we spend one minute a day explaining crypto. In plain English.

Just when you thought the drama around FTX, the recently collapsed crypto exchange, is over, a court filing has brought to light, just how shockingly bad the situation was. You may have seen the early warning signs: When rival Binance made a takeover bid, they walked away in less than a day.

The process Binance went through is called due diligence, and it involves going through the accounting books, employee records, legal documents, and so on to get a complete picture.

And this week we found out why Binance ran far away quickly: Through a filing in bankruptcy court.

Just so you understand what happens when a company goes down: It files for bankruptcy, which is a legal process to put it into a sort of deep sleep, while control gets transferred to new management. Their job is only one thing: Find where the remaining money is, get as much of it back, and then pay off the debt as much as they can.

It’s a dirty job. Bankruptcy managers see some really bad stuff and debtors rarely get all their money back. But this one was even worse: The guy they brought in had previously overseen some of the worst corporate scandals in America, including Enron. And in his first days at FTX, he flat-out said: I have never seen something as bad as this mess.

FTX had no good record of who its employees were. Passwords were exchanged through a shared email account. Sam Bankman-Fried, the founder, got a personal loan of over a billion dollars. There was no trustworthy accounting. In fact, the firm in charge of bookkeeping prides itself on being the only one with a headquarter in Decentraland - a virtual world. What could possibly go wrong?

But the worst part was how SBF handled customer money. When Alameda Research, his closely entangled trading firm made some really bad choices and owed billions of dollars to outside lenders, guess what he did? Stuck his hands into the customer funds and just paid Alamada’s debt off from there.

Yes… It was bad. But hang in there. There is more to crypto and Web3. So in the next episode, we’ll lift you up. Because we really think this world is quite amazing and can be the future of your internet. Stay tuned for a special tomorrow, when we celebrate episode 300!

This podcast is produced by Cryptohunt.it the easiest place to learn crypto. Copywriting is done by Arndt Voges, Social Media is done by Brett Holleman, Design is done by Carmen Rincon and my name is Christian Byza, Co-Founder of Cryptohunt and I am your host of this daily show.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.