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This Week on Crypto Twitter: FTX’s Collapse as It Happened, in Tweets

The entire market crashed this week as one of the industry’s biggest players watched their empire totally evaporate in five days flat.

4 min read
Binance CEO Changpeng "CZ" Zhao and FTX CEO Sam Bankman-Fried. Image: FTX
Illustration by Mitchell Preffer for Decrypt

This week, the crypto industry witnessed one of the most sudden and devastating contractions of wealth in financial history. Sam Bankman-Fried’s $16 billion empire—which was built up through his exchange FTX and his hedge fund Alameda Research—ran to zero in five days flat, bankrupting 130 affiliated companies with it. 

Naturally, it was all Twitter could talk about. Not only was the world’s favorite microblogging platform a vital conduit for people to air their thoughts on the matter, it also served as both the battleground and bulletin board to the crisis as it unfolded. 

To cover all the responses in-depth is a mammoth task that would frankly be impossible within the format of an article, so instead, here’s a roundup of the most important plays from all the main actors along with the biggest responses from third parties in the industry. 

The drama started last Sunday, when Binance CEO Changpeng Zhao said he would liquidate all of his exchange’s FTT tokens. FTT is the native token of FTX. 

Several hours later, Zhao gave his reason for doing so. 

The tweet caused a bank run as customers began withdrawing funds from the exchange en masse. A whopping $6 billion exited FTX over the next 72 hours. To put it into perspective, the exchange ordinarily handled “tens of millions” in withdrawals on an average day. 

By Tuesday, it became clear that FTX did not have the liquidity to handle the withdrawal requests; withdrawals were paused and things got juicy when Changpeng Zhao stepped in to bail out the exchange. 

Bankman-Fried also announced the bailout at the same time over on his profile. Further down in his thread, he was thanking his lucky stars that he had a buddy like CZ. 

Later on that day, Zhao tweeted something foreshadowing the next day’s events. It looked like he was getting cold feet. 

Then the shocker came on Wednesday: 

Changpeng Zhao elaborated on his reasons for the u-turn in a lengthy statement. He stressed his claim that none of his actions were part of a “master plan.”

In Bankman-Fried’s lengthy apology thread the next day, he stressed that he was trying to find alternate channels to raise the liquidity needed to make all the exchange’s depositors whole. Twenty tweets in, he congratulated Zhao. 

The crisis concluded on Friday with the news that FTX filed for Chapter 11 bankruptcy. Alameda Research, along with the exchange’s American subsidiary FTX.US and roughly 130 affiliated entities will also be filing for bankruptcy. 

Bankman-Fried has now resigned from his role as CEO and veteran bankruptcy lawyer John J. Ray III will fill his shoes. Ray previously shepherded Enron through its bankruptcy proceedings—a fitting parallel.

Later that day, Shiv Shrivastava, CEO of DeFi project Palladium, saw a bittersweet symbol of Bankman-Fried’s fallen empire from his balcony.

The industry responds 

Throughout the week, several crypto companies disavowed any connection to the beleaguered FTX, including Coinbase, Circle, and Tether

Coinbase CEO Brian Armstrong announced that his company held no FTT tokens or exposure to either FTX or Alameda. Armstrong blamed FTX’s liquidity troubles on “risky business practices, including conflicts of interest between deeply intertwined entities, and misuse of customer funds.” He also said a lack of regulatory clarity in the U.S. drove consumers towards offshore exchanges like the Bahamas-based FTX.

Jeremy Allaire, co-founder and CEO of stablecoin issuer Circle, denied exposure to FTX. He agreed with Armstrong and framed the crisis as a temporary aberration on crypto’s journey towards wider adoption and becoming something with utility rather than speculative value. 

Jesse Powell, the former CEO of the Kraken exchange, had some very barbed words to say about Bankman-Fried and his venture capital investors. 

Su Zhu, who co-founded crypto hedge fund Three Arrows Capital (3AC)—an early casualty of Crypto Winter—wanted Bankman-Fried to know he’s not alone.

Famous whistleblower Edward Snowden thinks FTX was a dud from the get-go, along with Binance and Kraken. 

Republican Tom Emmer wanted folk to know that Bankman-Fried may have been getting help from regulators all along. 

And Twitter CEO Elon Musk said Bankman-Fried set off his "bs detector."

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