Crypto collapse: J. Pierpont Moneygone — FTX rekt, bought by Binance

This latest instalment in our ongoing series on the meltdown caught everyone by surprise. Who picked FTX as the next domino to fall, eh?

It’s Amy’s turn, so this is posted over at her blog. [Amy Castor]

Alameda Research is Sam Bankman-Fried’s crypto hedge fund. Ian Allison from CoinDesk revealed that $5 billion of Alameda’s assets are FTX’s own FTT exchange token. Horribly illiquid … and the total issuance of FTT is only $3 billion.

There was much worry and FUD in the ensuing days. Eventually, CZ from Binance dumped all of Binance’s FTT, crashing the price.

FTX switched off withdrawals this morning. By 4:00pm UTC, CZ said he was buying FTX and customers would get their funds. Or at least, CZ signed a non-binding letter of intent, subject to due diligence.

That is: CZ caused a run on FTX, then bought the pieces.

Also, Alameda has taken out loans against its FTT. Those loans are probably toast. We expect contagion to ensue.

Crypto had its Bear Stearns. Are we up to Lehman Brothers yet?