Market Wrap: FTX Was Sam Bankman-Fried’s 'Personal Fiefdom,' Lawyers Said

The CoinDesk Market Index, bitcoin and ether were all in the green.

AccessTimeIconNov 22, 2022 at 10:42 p.m. UTC

FTX lawyers at the company’s first bankruptcy hearing in Delaware detailed its “abrupt and difficult” collapse within the course of two weeks – shortly after CoinDesk’s Ian Allison reported that Alameda Research, a sister company of the FTX crypto exchange, held an unexpectedly large amount of FTT tokens issued by FTX itself.

This article originally appeared in Market Wrap, CoinDesk’s daily newsletter diving into what happened in today's crypto markets. Subscribe to get it in your inbox every day.

  • “You have witnessed probably one of the most abrupt and difficult collapses in the history of corporate America,” James Bromley of Sullivan and Cromwell, an attorney representing FTX, explained during the company’s first bankruptcy hearing.
  • Bromley described the FTX empire – at its height valued at $32 billion – as the “personal fiefdom of Sam Bankman-Fried,” the former CEO of the exchange.
  • When Bankman-Fried reluctantly relinquished his position to FTX’s new CEO, former Enron cleanup man John Jay Ray III, it allowed those left at the company to, “for the first time, really see under the covers and recognize that the emperor had no clothes,” according to Bromley.
  • Though Bromley did not identify Bankman-Fried by name, he told the court that FTX “was in the control of a small group of inexperienced and unsophisticated individuals, and unfortunately, the evidence seems to indicate that some or all of them are also compromised individuals.”
  • There are over 100 different debtors tied to the FTX group that filed for bankruptcy, another attorney said.

Other News

Bitcoin (BTC) regained the $16,000 level Tuesday, coinciding with the news that Cathie Wood's Ark Investment Management bought $1.5 million in Grayscale's Bitcoin Trust (GBTC). The largest cryptocurrency by market capitalization was up 2.4% to $16,100 – after hitting a two-year low of $15,480 Monday. Despite Tuesday’s gain, Julius de Kempenaer, senior technical analyst at StockCharts.com, told CoinDesk that as the market is “in digestion,” it’s possible to see BTC drop further – possibly to the $12,500 level before the end of the year.

Several altcoins also had a strong performance: Ether (ETH) followed a similar trajectory as BTC, and was up roughly 2.6% to $1,120. Solana’s SOL token was up 3% to nearly $12. CRV, the governance token of decentralized exchange Curve, was the top performer of the day among the basket of digital assets in the CoinDesk Market Index as the token jumped over 25%, reversing its sharp drop earlier in the day.

Equity markets across the board turned green: U.S. stocks edged up ahead of the Thanksgiving holiday, with the Standard and Poor's 500 Index up 1.3% at closing. The Dow Jones Industrial Average (DJIA) gained 1.1%, while Nasdaq was up 1.3%.

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Altcoin Roundup

  • CRV, the governance token of decentralized exchange Curve, has turned volatile amid a surge in the number of coins held at centralized trading platforms. The token dropped 17% to a two-year low of 40 cents early Tuesday before erasing the losses with a V-shaped recovery.
  • Saudi Arabia’s non-fungible token (NFT) collection soared after an unexpected soccer win against Argentina in the FIFA World Cup. Sales for the Saudi Arabia-themed NFT collection called “The Saudis” increased 387% on Tuesday. Argentina’s fan token, in contrast, dropped 21% over the past 24 hours and was trading at $5.44 at the time of publication.

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