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For anyone who needs a refresher, here’s what happened:A bunch of twenty-somethings who were all sleeping with each other went to the Bahamas and set up crypto exchange FTX and trading house Alameda, which were valued at $32 billion.
Then everything fell apart.
— Genevieve Roch-Decter, CFA (@GRDecter) November 18, 2022
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Then Binance said it might buy FTX, but pulled out once they saw the $8 billion “black hole” in the FTX balance sheet.To top it off, the SEC and DOJ launched an investigation into securities-law violations at FTX.
— Genevieve Roch-Decter, CFA (@GRDecter) November 18, 2022
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Just two days ago, crypto lender BlockFi froze customer withdrawals and prepared for bankruptcy. BlockFi held $3.9 billion in client assets in the second quarter this year.Crypto lender Celsius had about $13 million in under-collateralized loans to Alameda.
— Genevieve Roch-Decter, CFA (@GRDecter) November 18, 2022
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Crypto prices only dropped some 20% during the crisis. Crypto investors are still in denial.Just like how SBF was in denial about his own failure.
FTX was never a functional company. It was a passion project run by kids trying to change the world. They failed.
— Genevieve Roch-Decter, CFA (@GRDecter) November 18, 2022
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Binance didn’t have direct exposure to FTT, so it’s safe for now.It’s even suggested the development of a “crypto recovery fund.”
Binance claims to hold 1:1 reserve, and many see it as the rock of stability for the crypto industry.
— Genevieve Roch-Decter, CFA (@GRDecter) November 18, 2022
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SBF subscribed to an unconventional theory called “effective altruism.”The hypothesis of effective altruism is that charity should be run by algorithms and objective-maximizing functions.
It’s the sort of ivory-tower philosophy that crypto bros love.
— Genevieve Roch-Decter, CFA (@GRDecter) November 18, 2022