The Collapse of the FTX Empire
We'll talk about elections next week.
Hello folks. It is Election Day in the U.S., and that was going to be my main focus today, up until about 11:05 a.m. ET anyway. That’s the point when Sam Bankman-Fried announced that his company FTX would enter a “transaction” with Binance, which Binance CEO Changpeng Zhao later clarified was a letter of intent for Binance to acquire FTX.
You’re reading State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. Click here to sign up for future editions.
The fall of an empire
WELL, today has been a day. I had a whole election thing planned, but we’re not going to know what’s happening for a while anyway – so instead, I’m going to refer you to the links below to catch up on today’s news. CoinDesk will have a live-blog kicking off at about 8:00 p.m. ET to monitor for major moves and results.
Why it matters
FTX was a huge player. According to CoinGecko, as of this morning FTX was the fourth-largest exchange by volume. Sam Bankman-Fried was a huge donor during the midterm elections and was a leading voice on some legislation. He might still be, but his company going from being “fine” to signing a letter of intent with Binance over the course of two days might have some long-term ramifications. We’ll have more on this in the coming days, but for now catch up on the last … week? the last week of this chaos here.
Breaking it down
This whole thing started last week when my colleague Ian Allison reported that Alameda Research, a trading firm founded by Bankman-Fried and tied to FTX, held a remarkable number of FTT tokens on its balance sheet. FTT is the token issued by FTX.
Here’s what happened next:
We’re going to need some time to figure out the implications. Bankman-Fried personally was a major donor this past election cycle (and sprung to prominence on the back of major donations in the 2020 election). A political action committee backed by Bankman-Fried is even rumored to be the next main super PAC to receive President Joe Biden’s blessing in the next election cycle.
There's also regulatory implications. FTX US Derivatives (formerly LedgerX) has a number of CFTC licenses, and FTX famously applied to try and settle derivatives directly, which the CFTC has yet to rule on.
Changing of the guard
If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at firstname.lastname@example.org or find me on Twitter @nikhileshde.
You can also join the group conversation on Telegram.
See ya’ll next week!
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.