FTX Bankruptcy Timeline
Background:
The last week has revealed what many already knew, the importance of decentralized finance cannot be overstated. We have witnessed the third largest cryptocurrency exchange implode, revealing the gross misuse of customer funds to plug trading losses and the largest crypto-related bankruptcy. The ripple effects of the demise of FTX are still not fully known, but what we currently know is that thousands of individuals and companies alike have lost billions of dollars, unlikely to see a penny anytime soon. If there is anything to be taken from this week’s events, is that self-custody and removing “trusted” middlemen are more important now than ever.
FTX was founded in 2018 by Sam Bankman-Fried, the exchange was host to crypto spot, derivatives and options trading and grew to be the 3rd largest exchange by volume. They sponsored stadiums, sports teams, celebrities
Alameda Research was a cryptocurrency quantitative trading firm founded by Sam Bankman-Fried and Caroline Elisson in 2017. The firm grew to fame by racking up huge profits and landing itself on crypto exchange profit leaderboards. The firm provided liquidity on nearly all leading exchanges and made several large venture investments in crypto start-ups.
The Timeline:
2nd November:
Alameda Research has its balance information leaked, showing the majority of assets locked up in illiquid crypto tokens. Source
6th November:
Binance CEO announces decision to offload $500 Million of FTT tokens. Shortly after $500 Million of FTT were sent to Binance to be sold. Source
7th November:
Co-CEO of Alameda offers to buy all of Binance’s FTT for $22. Source
FTX CEO tweets that FTX is fine and points finger at Binance for spreading rumours. The tweet is now deleted.
Users begin to withdraw assets in droves. Assets in some tracked wallets go from nearly 3 Billion to under 1 Billion in less than 12 hours.
8th November:
The Block reported that on-chain activity suggests that FTX had halted withdrawals. At this point, the FTT price had already broken through $22 and began to plummet. Source
SBF and Binance announce that Binance will be acquiring FTX and have signed a letter of intent. Source FTT price jumped nearly 40% on this news.
Binance’s CZ said they intended on acquiring FTX to protect FTX users
ByBit sees that Alameda’s allocation of BIT tokens was sold. Breaking a three-year deal where BitDAO holds FTT and Alameda holds BIT tokens - with both promising not to sell. Source
9th November:
The deal falls through. Binance announced that after further due diligence they would no longer be acquiring FTX. Citing news mishandled customer funds and alleged US agency investigations. Source
“Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”
FTX CEO scrambles for help, telling investors it will need a cash injection or face bankruptcy. Source
10th November:
The founder of the TRON blockchain announced that he was working on a recovery plan for all those that held TRX, BTT, SUN and JST on FTX. Source As a result, the price of TRX pumped significantly on FTX as users hope for a way out.
FTX CEO apologizes, says he fucked up and his priority is doing right by users, then employees, then investors and then…himself (?) Source
SBF announces that Alameda Research will be winding down and no longer trading Source
Ex-head of institutional sales says withdrawals for Bahamian users were resumed as a result of instructions from local regulators. Source For a brief period, some withdrawals were being processed.
The Wall Street Journal reports that FTX had used customer assets and lent them to Alameda research. Reporting that $10 Billion had been lent out. Source
The Head of institutional sales at FTX says his access to mail and Slack disconnected. Source
Tether froze $46 Million USDT held by FTX, says they are complying with lawmaker requests. Source
11th November:
SBF announces that FTX, FTX US and Alameda have all filed for Chapter 11 bankruptcy. Source
Enron’s liquidator John Ray was appointed as the new FTX CEO to oversee the bankruptcy process. Source
People start purchasing NFTs from Bahamas users in order to withdraw funds from Bahamas-based FTX accounts. E.g Know a friend in the Bahamas, ask them to list NFT for your full balance, purchase it, and they withdraw for you. Approx $50 Million in volume transacted before FTX shut down NFT trading. Source
12th November:
Hundreds of millions moving out of FTX-tracked wallets. People unsure if this is liquidators getting to work, a hack or some form of internal theft. Source
An Admin in the FTX telegram chat says FTX has been hacked. Says FTX app and website contain malware, advises users to delete. Source
FTX General Council and multiple FTX sources confirm they are not aware of who is behind the above transfers. “Investigating abnormalities with wallet movements related to the consolidation of FTX balances across exchanges - unclear facts as other movements not clear. “ Source
Reuters reports that SBF had an internal back door that would allow him to execute commands that would alter internal accounting records without alerting other departments. This is apparently how he sent $10 Billion to Alameda without anybody knowing. Source
13th November:
Binance CEO hinted at crypto.com and gate.io being bad news as both exchanges rush to show proof of reserves. Source
Crypto.com “accidentally” sent 320,000 ETH to another exchange (Gate.io). Gate.io shortly sent 285,000 ETH back to Crypto.com. The crypto.com CEO says this was a mistake (?). However, it looks like this could be crypto.com helping Gate with proof of reserves. Source
As CoffeeZilla put it “Crypto.com CEO is claiming they “accidentally” sent $400 million of their eth to the wrong wallet. He’s either lying, or incompetent.”
$400 Million of non-circulating FTT moved, this amount should have only been moved in batches on a schedule Source
Binance delisted FTT from its derivative products and disabled FTT deposits. Source
Other Weird Stuff/Rumours:
Caroline has a Tumblr called "worldoptimization." Her kink is men who control most major world governments. Source
The theory Alameda took down LUNA and Three Arrows Capital. Source
Elon Musk joined a crypto Twitter space about FTX, said “Doge to the moon” and left. Source
SBF getting on a jet to Argentina Source
How to lose $10 Billion - Caroline Elisson, CEO of Alameda Research. Source
The Ukraine government may have crypto stuck with FTX. Source