Today was a big day for the crypto community. Why? Because the fallen-from-grace Sam Bankman-Fried went live with Andrew Ross Sorkin at DealBook Summit 2022. We’re diving into that big time today/tonight.
Also on deck for today: Coinbase ($COIN) base is delisting four big-name cryptocurrencies, Kraken is eliminating 30% of its workforce, and a look at Bitcoin from a technical analysis perspective.
During this crypto bear market, days like today have been far and few. A good chunk of the crypto market is up +3% or more.
And warp your head around this: Ethereum Classic ($ETC.X) is in the Top 10 gainers today, despite Coinbase’s announcement that ETC will be delisted (omg spoiler alert).
Before we dive in, here’s how the market looked at the end of the trading day:
Note: Because of Powell’s speech and the volatility of all risk-on assets, it’s possible that the results in the table below could be drastically different by the time you read this Litepaper.
|Ethereum Classic (ETC)||
|Altcoin Market Cap||
|Total Market Cap||$815 Billion||3.27%|
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“Look, I’ve had a bad month.” – Sam Bankman-Fried (SBF)
“I didn’t knowingly commit fraud.”
“I didn’t knowingly commingle funds,”
Those are just some quotes from one of the most important and sought-after nights for those in the cryptocurrency space. Disgraced former FTX founder and CEO Sam Bankman-Fried decided to attend the DealBook Summit 2022 virtually.
There, he was questioned by CNBC’s Andrew Ross Sorkin. It was less a financial interview and more like we watched a Law & Order deposition scene.
People want answers and want to know what happened earlier this month, and Mr. Sorkin tried his best to get some answers. We’re going to highlight some of the most important parts – so make sure you come back this evening as we’ll be updating this throughout the night.
Does SBF feel like he did anything wrong?
If there’s one question that SBF kept dodging and never really answered, it was the repeated attempts by Sorkin to get an answer to the comingling of funds between Alameda Research and FTX.
SBF side-swept most of those questions but did, at least once, confirm that there was no co-mingling of funds.
Regarding personal responsibility, SBF said, “Listen, at the end of the day I was CEO of FTX, whatever happens, I had a duty to everyone. To do right by them. Clearly, I didn’t do a good job of that, and made a lot of mistakes I wouldn’t ever do again.”
On a positive note, according to SBF’s knowledge, entities like FTX US, FTX Japan, FTX Australia, and FTX Europe are fully solvent. SBF said several times that FTX US is, to his knowledge fine and that there is no reason why people couldn’t withdraw their assets right now.
Later in the interview, SBF said he was confused as to why FTX.US was not processing withdrawals.
The relationship between Alameda Research and FTX
Sorkin cited past questions from Bloomberg to SBF about his relationship with Alameda and FTX. Not just the business side but the personal side. Sorkin asked if Alameda people lived in his (SBF) penthouse with FTX employees.
SBF said, “I did live with some team members of Alameda for a while.” However, he denied living at the penthouse currently.
Sorkin pressed SBF on how he had access to customer funds and Alameda funds – something SBF didn’t clearly answer.
The most detailed response SBF made was, “Look, I wasn’t running Alameda, I didn’t know what was going on, I didn’t know the size of their position. These are things I’ve been learning over this month.”
Sorkin again inquired about the FTX and Alameda relationship and how it started immediately and never stopped. SBF’s response was, “… in 2019, they were very connected – Alameda was the primary liquidity provider for FTX at that time. Scroll forward to 2022, it was down to 2% of volume (from 40%).”
When did SBF know shite hit the fan?
Sorkin asked when SBF first knew there was a problem.
SBF: “The time that I really knew there was a problem was Nov 6th. Nov 6th was the date that the Tweet about FTT came out. And by late on Nov 6th, we were putting together all the data and info that obviously should have been put together way later.
And, you know, we looked at that, there was a potentially serious problem there. Alamedas position was big on FTX, it had taken a huge hit, and we’re seeing a run on the bank’s start.
$4 billion in client withdrawals a day. At that point, we were looking for sources of financing.
Rewind a few days before, I was a little bit nervous, but not like this.
Nov 2nd, I was worried there would be substantial losses for Alameda. I didn’t think it was going to be a massive loss for FTX customers. More like Alameda is going to be really tight on funds.
I never tried to commit fraud to anyone. I was shocked at what happened this month.”
The value of the collateral
SBF was asked about the collateral FTX used. “Let’s talk about collateral. Clearly, you were using FTT, Solana, and other tokens as collateral, which required you to mark them with a value a certain way. Do you think you were marking them property?”
SBF’s response: “In Alameda’s case, I don’t think I was marking them according to a good risk perspective. I think that I don’t have any strong statements over what value they have, but clearly, I was not nearly cautious enough from a downside perspective or extreme downside perspective.
In my head, I was looking at a 30% down move as an extreme like we have seen before like we have seen once before, but instead, we had a 95% down move in the course of a year and a 60% down move in a few days with little liquidity.”
When asked about how much Alameda borrowed from BlockFi, SBF said, “maybe a hundred million?”
What does SBF think about his future?
Sorkin asked, “I’m curious on a personal level, to the degree that there’s been a lesson in this; what do you see as your future at this point? And I know you’re an optimist, but where do you think, realistically, is your future?”
SBF answered with, “So *long pause* what is my future? I don’t know. When we fast forward, I have no idea what I’ll be doing a long time from now. What am I thinking? I don’t know what is gonna happen; a lot is not in my hands right now.
I want to be helpful as much as where I can to help FTXs customers. I want to help wherever I can, which can bring a lot more value to those customers.
I don’t know where that will lead – before filing (bankruptcy), there was a lot of interest in financing, a lot of strong interest. I can’t make any promises about anything, but I had thought there would be a pathway forward here instead of if we had just sold off. It’s not in my hands.
But I think that it would make sense to be exploring that. I think there’s a chance that customers may be made a lot more full or even fully full.”
We’ll update this article further this evening – thank you for reading and for your patience!
The reason for discontinuing support is due to low usage. This makes sense in XRP’s case because Coinbase terminated any trading of XRP in January 2021 when the SEC went gangbusters on Ripple.
Coinbase’s announcement ensures customers that the delisted cryptos won’t disappear after January 2023, and you’ll still be able to transfer them out of Coinbase’s wallet(s).
If you wanted evidence of a huge lack of participation in the crypto space, one would anticipate that at least one of the four delisted cryptos would face intense selling pressure with this news – but that hasn’t happened. 🤒
U.S.-based cryptocurrency exchange Kraken announced today via their corporate blog that they are cutting 1,100 jobs (roughly 30%) to weather the current crypto market storm.
Kraken announced a very generous severance package for their departing employees (which they refer to as Krakenites):
- 16 weeks of pay
- performance bonus(es)
- 4-months of healthcare coverage and continued access to counseling services
- extension of exercising their vested options
- dedicated visa and immigration support
- networking opportunities, career support, interview practices, and more
Kraken joins Crypto.com, Gemini, and Coinbase ($COIN) as a company cutting staff during the bear market.
In June 2022, Kraken announced a massive 500+ hiring push. At the same time, Kraken’s founder, Jesse Powell, generated some criticism for his 31-page anti-woke company culture piece titled “Kraken Culture Explained.”
Powell stated only 20 of Kraken’s 3,200 employees were not “totally on board.” 🦑
It’s been a while since we’ve done a Technically Speaking article, but Bitcoin’s ($BTC.X) Point and Figure chart warrants a peak.
The funky light-red triangles you see on the chart below are part of a type of pattern analysis known as a Harmonic Pattern. Harmonic Patterns are Fibonacci retracement and extension structures that, for whatever reason, develop in every market in every time frame.
All The Big News – December 2, 2022
Accusation That FTX Misused Customer Funds Presents a ‘Prison’ Problem, Says Crypto Legal Expert Jeremy Hogan From The Daily Hodl
U.S. Trustee asks bankruptcy court to appoint FTX trustee From The Block
FTX Japan drafts plan to return client funds From Cointelegraph
Sam Bankman-Fried’s still sorry, but now he says his memory isn’t great From The Block
Bullets From The Day:
🦄 One of the biggest players in the DeFi (Decentralized Finance) and DEX (Decentralized Exchange) spaces, Uniswap ($UNI.X), is taking a more active role in the NFT space. Uniswap announced via Twitter that NFTs are officially live on Uniswap. Uniswap purchased the NFT aggregator Genie this past Summer. Former Genie users/customers will benefit from a $5 million airdrop worth of USD Coin ($USD.X). Genie users who traded at least once before April 15, 2022, will get $300 in USDC, and anyone who owned an NFT will get $1,000 USDC. Full story from CryptoPotato.
😱 The popular encrypted instant message service, Telegram, is reportedly building a cryptocurrency exchange. Telegram’s founder, Pavel Durov, wrote in his Telegram channel that he and his team would expand on the Fragment (decentralized Telegram name auction platform). “Telegram’s next step is to build a set of decentralized tools, including non-custodial wallets and decentralized exchanges for millions of people to securely trade and store cryptocurrencies. This way, we can fix the wrongs caused by the excessive centralization, which let down hundreds of thousands of cryptocurrency users,”. Read more from Finbold.
🤫 The 6th largest privacy cryptocurrency by market cap, Secret Network ($SCRT.X) dodged a major bullet. CEO Guy Zyskind reported a new patch on the network after a group of white hat (good hackers) hackers contacted Secret Network about a vulnerability. Long story short, the vulnerability allowed the white hack hackers to “…break the privacy preserving features and decrypt the internal state of all smart contracts.” In other words, no more secrets. Many blockchain networks provide substantial rewards if a hacker can find an exploit and report it – it’s not known if this group was given a reward. If you want the full technical explanation, read it here at CoinTelegraph.