FTX Saga: Aftermath Day 4 - Contagion Report
💊 Daily Bullets 💊 Thursday, November 10th
The ongoing FTX/Alameda implosion saga has entered another day and things are getting real out there... Lots of people are hurting and the contagion is only just beginning. Whatever happens next, we’re recording all the details in a timeline fashion so make sure to follow along as we track this historic event. Worrying things to keep in mind - deleveraging during the fallout and a cascade of margin calls due to the close relationship between FTX, Alameda Research and the rest of the crypto ecosystem. The implications of this gargantuan event are most likely only just beginning. Stay strong and reach out if you need to talk.
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FTX Day 4 tl;dr:
Events:
Binance will not buy FTX after reviewing the company's financials
FTX would need to file for bankruptcy without a cash injection - top priority is fundraising
DoJ and SEC are working together to investigate FTX U.S
It took a grossly irresponsible amount of time before FTX closed customer deposits
SBF transferred at least $4B to Alameda after suffering losses in May and June
Alameda owes FTX about $10B
Alameda Trading is winding down
Justin Sun working with FTX to protect Tron users with funds stuck on FTX at a 1:1 ratio
Tether freezes $46M USDT on the Tron blockchain following a request from law enforcement
FTX approached U.S.-based crypto exchange Kraken about a potential rescue deal
Binance hot and cold wallets holds a total of ~ $70B
Japan's financial regulators have ordered FTX's Japan arm to suspend operations
Crypto.com, OKX and Kucoin, BitMEX providing proof of reserves & proof of liabilities
Tether begins to depeg. The Tron DAO Reserve will purchase 1B USDT to fight short sellers
Curve's 3pool imbalanced - USDT accounting for ~ 80% of the pool's liquidity
FTX begun processing withdrawals again following a more than 48-hour shutdown
SBF seeking up to $9.4B for FTX's rescue
Entities & Casualties Status:
Sequoia FTX investment now worthless ~ $213.5M in losses but fund is still in good shape
Nexo currently has net zero exposure to FTX and Alameda Research
Kraken had no exposure to Alameda Research - only holds ~ 9,000 FTT
Genesis Trading reported losses of ~ $7M
GSR will cover client losses from FTX collapse
Hodlnaut held assets worth $13.1M on FTX
El Salvador's president Nayib Bukele denies country had any funds on FTX
Now for a more expanded and detailed look at the day…
⛓ Crypto News:
Binance will not buy FTX after reviewing the company's financials. SBF told investors that the company would need to file for bankruptcy without a cash injection and that the top priority is to conduct a fundraise. Alameda Trading is winding down. Alameda owes FTX about $10B. FTX has approached U.S.-based crypto exchange Kraken about a potential rescue deal. FTX begun processing withdrawals again following a more than 48-hour shutdown
SBF transferred at least $4B to prop up sister company Alameda Research after suffering losses from deals in May and June. A portion of these FTX funds were customer deposits
On the brightside, US CPI came in lower than expectations - fell to 7.7%: 7.7% YoY, 0.4% MoM Expected: 7.9% YoY, 0.6% | MoM US CPI Core: 6.3% YoY, 0.3% MoM Expected: 6.5% YoY, 0.5% MoM
Bitcoin falls under $16,000 for the first time since November 2020 - hitting a 2 year low
Justin Sun is working on solution with FTX - will protect Tron users with funds stuck on FTX at a 1:1 ratio
Tether has frozen $46M of USDT on the Tron blockchain following a request from law enforcement
Worrying things: deleveraging during the fallout, cascade of margin calls due to the close relationship between FTX and Alameda Research and the rest of the crypto ecosystem
Sequoia says its investment in FTX is now worthless with losses totaling $213.5M and that the fund is still in good shape
Crypto lender Nexo currently has net zero exposure to FTX and Alameda Research - they withdrew its entire balance of funds from FTX within the past few days
Crypto trading firm GSR will cover client losses from FTX collapse, will no longer trade on Huobi and "manageable exposure" to FTX following the crypto exchange's collapse
Kraken said it has no exposure to Alameda Research, but that it holds around 9,000 FTT
European crypto asset trading and investment group CoinShares disclosed $30.3M currently stuck on FTX. This is roughly equivalent to 11% of its net asset value
No Aptos Labs or Aptos Foundation treasury is held by FTX
Lender Genesis Trading reported losses of about $7M after it hedged and sold collateral in anticipation of extreme market volatility
Troubled crypto lender Hodlnaut held assets worth $13.1M on FTX. Unclear whether Hodlnaut’s managers moved funds away from FTX before operations were halted
Starknet new governance organization called the Starknet Foundation - will lead grants and funding for new Starknet protocols and aim to create standards that align with Ethereum’s decentralization and open source standards
Layer 1 blockchain startup Aptos partnered with Google Cloud in a move that will see the search giant power some of its validator nodes, among other services
Data warehousing platform Space and Time has joined chipmaker Nvidia's startup program just over a month after raising a $20M strategic funding round backed by Microsoft’s venture arm M12
Shell, one of the world’s largest oil and gas companies, has signed a two-year partnership with Bitcoin Magazine to sponsor the 2023 and 2024 Bitcoin Conferences
👨⚖️ Economic/Government/Regulatory:
The Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) are working together to investigate FTX’s U.S.
💸 Exchange News:
Binance list of hot and cold wallets reveal: total of around $70B is held in BUSD, USDT, BNB, BTC, ETH & USDC
Bitmex, which claims no FTX or Alameda exposure, plans to launch its native token regardless of market volatility amid the collapse of FTX. No material exposure to FTX's native token or any other tokens issued by centralized exchanges
El Salvador's president Nayib Bukele, who denied that the Central American country had any funds on FTX's exchange
FTX has suspended new users from signing up on its trading platform following widespread criticism that was allowing onboarding despite facing liquidity troubles
Japan's financial regulators have ordered FTX's Japan arm to suspend operations in the country
Crypto.com commits to proof-of-reserves after halting certain deposits and withdrawals. OKX and Kucoin say proof of reserves will be ready in a month. BitMEX provides snapshot update to bitcoin proof of reserves & proof of liabilities
OKX will regularly delist contracts with poor liquidity in order to prevent market risks such as BTT, SC, WNXM, SOS, ASTR, and NYM
🏦 DeFi News:
Tether dominance nears all-time high as crypto crashes however has fallen 1% below its peg. The Tron DAO Reserve will purchase 1B USDT to fight short sellers
Curve's 3pool, one of the most important pools for stablecoins in DeFi, is heavily imbalanced - USDT accounting for 80% of the pool's liquidity
Solana plan to unstake has now been postponed, and all 28.5M SOL have now been re-staked
dYdX placed Solana trades in “close only” mode, meaning users will only be able to close out their positions on the perpetuals exchange and not open new ones citing market volatility
Solend has accrued a bad debt of more than $6M from a large underwater position
The Tron network's algorithmic stablecoin USDD has begun to depeg - fell to as low as 96 cents
Debank - "Time Machine" - help you look back your complete portfolio details (not just the total net worth number) from any day in history
🖼 NFT/Gaming/Metaverse News:
OpenSea will continue to enforce creator royalties on NFTs following significant pushback from the community
Soccer star Lionel Messi is joining Sorare, the French NFT trading game, as an investor and brand ambassador
Streetwear brand The Hundreds has canceled a planned NFT drop on OpenSea due to the marketplace’s stance on creator royalties. Many notable Web3 creators are stepping up their pushback
Wuhan omits NFTs from metaverse plan amid regulatory uncertainty in China
💰 Fundraises:
Web3 messaging infrastructure Notifi raises $10M seed round co-led by Hashed, Race Capital
Anything World raises $7.5M to assist content creators using AI-based animation - investors include Acrew Capital, Alumni Ventures and Warner Music Group
The company behind Icons of Theia, Theia Studios secures $2.4M to create a decentralized modding platform intended to revolutionize strategy games
👶 Early Stage Projects:
12 Projects selected for Season 5 of Binance Labs Incubation Program, spanning infrastructure, zkDID, DeFi, tooling, security, gaming, and payment sectors
What’s your take on today’s news? Anything interesting that you have to say about these stories? Did we miss anything that should’ve been included?
📊 Data:
TL;DR: Over the past 7 days, Smart Money has been sending FTT onto exchanges and removing stables, Bitcoin and ETH. Meanwhile all wallets have been sending primarily GUSD, FTT, TUSD, cbETH to exchanges and withdrawing stables ETH and Bitcoin in large amounts
Exchange Flows:
Smart Money Exchange Inflow:
Smart Money Exchange Outflow:
All Wallets Exchange Inflow:
All Wallets Exchange Outflow:
What is the Data telling you? See anything that sticks out to you?
🎓 Research/Reads:
A Letter from KuCoin CEO - source
Where do we go from here? The crypto endgame is here (or is it?) - what do? - source
Have you seen our institutional-quality research?
🌍 Crypto Twitterverse:
Did we miss anything or is there anything you want to discuss? We’d Love to hear your feedback and engage with the community! Feel free to leave a comment and let us know your thoughts on the Crypto market!
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