Official bankruptcy court filings state that FTX owes more than $3 billion to its top 50 creditors. The largest single loan listed in the document is over $226 million, with the rest of the total debt owed falling somewhere between $21 million and $203 million.

The "hack"...

As things unfolded last week a significant number of tokens were moved from the official storage wallets of FTX. It's not surprising that some would suspect a "inside job," but former FTX employees are spreading rumors that the same authorities from the Bahamas government who are investigating the company for possible legal violations are also the thieves.

Analytics firm Chainalysis is tracking the funds that originated from the FTX exchange and say the funds are now being traded from Ethereum to Bitcoin. The FTX hacker once held 228,523 ETH, making them one of the top Ether wallets globally.

...but was there actually no hacker at all?!

To be fair, the rumors started because no one was coming forward to say otherwise.  Millions in crypto gets moved, with no legitimate entity claiming responsibility, the logical conclusion is a hack. 

After coming forward, the Bahamas government confirmed they were indeed behind it - but it wasn't corrupt officials stealing funds. Regulators in the Bahamas officially state they are in possession of the funds which were taken as part of a seizure of assets - to prevent anyone at FTX from doing anything with them.

It all seemed settled, then we learned - this isn't what happened either.

The actual story with the FTX "hack"...

Collateral Damage...

So far, Solana has lost over 60% of its value since the FTX saga began, and users have removed about an equal percentage from the total staked supply. In response, Tether announced they will be taking $1 billion USDT it had on the Solana blockchain and moving it to the Ethereum blockchain, as they don't foresee the supply being needed on the Solana blockchain in the near future.

While there's no shortage of die-hard Solana supporters posting that they're taking this opportunity to load up on SOL tokens at a discount, others are saying there's still a big hit to come, with FTX rumored to a large amount of Solana tokens that they will probably be forced to put on the market. 

Sam Bankman-Fried...

One of the most interesting things to watch in the Sam Bankman-Fried (aka SBF) fallout are those who previously praised him, now trying to figure out why they ever said things that sound completely insane today.

In all fairness, while Sam's wrongdoings were deliberate and dishonest - blaming everyone who once worked with, or once simply liked the guy is going a step too far, in my opinion. If the accusations we've heard are true, you can be sure very few people knew the truth

Sam had accumulated a sizeable list of endorsements, and it wasn't made up of a bunch of easily scammed or gullible people...

Even the person who begun FTX's downfall first believed they were legit.  Binance CEO 'CZ' started the avalanche that would burry Sam and FTX by sending out of tweet when he lost confidence in the company - but before that, he trusted Sam and FTX enough to have $2 billion of his assets tied up in their FTX's official token, FTT.

Earning trust within an industry can be a chain reaction, where getting 'in' with one person who is more established than yourself can lead to a dozen more if you play your cards right.  So who was the first 'big name' in crypto to publicly link themselves with Sam? I have no idea, and they aren't to blame for this anyway.

While researching another story I came across this, the only organization that I've seen address the situation by adding disclaimers to their old write-ups about Sam.

The organization is called 80,000 Hours, and they say their goal is to 'provide research and support to help students and graduates switch into careers that effectively tackle the world’s most pressing problems' 80,000 hours refers to the average time someone will spend working in their chosen career in their entire lifetime. 

What was a page on their site containing 10 paragraphs of pure praise for SBF, now begins with a statement:

 Our statement regarding the collapse of FTX

The collapse of FTX is likely to cause a tremendous amount of harm – to customers, employees, and many others who have relied on FTX. We are deeply concerned about those affected and, along with our community, are grappling with how to respond.

Though we do not know for sure whether anything illegal happened, we unequivocally condemn any immoral or illegal actions that may have taken place.

Prior to this, we had celebrated Sam Bankman-Fried’s apparent success, had held him up as a positive example of someone pursuing a high-impact career, and had written about how we encouraged him to use a strategy of earning to give (for example, on this page). We feel shaken by recent events, and are not sure exactly what to say or think.

In the meantime, we will start by removing instances on our site where Sam was highlighted as a positive example of someone pursuing a high-impact career, since, to say the least, we no longer endorse that. We are leaving up discussions of Sam in places that seem important for transparency, for example this blog post on the growth of effective altruism in 2021, and this user story.

In the coming weeks and months we will be thinking hard about what we should do going forward and ways in which we should have acted differently.

If you are out there trying the best you can to use your career to help solve the world’s most pressing problems with honesty and integrity, we also want to say we support and value you.

We are following the situation closely and hope to write more soon.

"Regarding any speculation as to whether this is a move against a competitor, it is not" said Binance CEO 'CZ' on Twitter, while confirming "recent revelations that have come to light" are behind a decision to sell-off $2.1 billion USD worth of FTT, the native token of rival exchange FTX.

Binance first obtained the tokens last year, as part of their payment from a pre-planned exit from investment in FTX equity.

Can't Have it Both Ways...

CZ first attempts to include the FTT sell-off as part of everyday 'business-as-usual' saying:

"Liquidating our FTT is just post-exit risk management, learning from LUNA."

That sounds like he's saying it's a purely strategic move, like the reasoning behind it could be something as simple as not believing the bear market has hit bottom - until in his next sentence where he immediately makes it clear - there's more to this story.

"We gave support before, but we won't pretend to make love after divorce. We are not against anyone. But we won't support people who lobby against other industry players behind their backs. Onwards."

FTX is accused as a company, or perhaps CEO Sam Bankman-Fried himself of doing something behind the scenes, with at least the goal of hurting a competing crypto company...

At least that seems to be the accusation CZ, the Binance CEO, is making, although vaguely, and because of their mention of LUNA (which famously crashed, then crashed the market, and never recovered) and FTT together - the FTX CEO has been trying to assure customers that their token has none of the same risk factors (and from what we can see, that's true).

Any comparison of FTT with LUNA is a bit unfair...

There's no reason for CZ to bring back memories of the LUNA disaster when mentioning FTT - none of LUNA's risk factors can be applied to FTT.

"A competitor is trying to go after us with false rumors. FTX is fine. Assets are fine" said CEO Sam Bankman-Fried his first public response.

However - Binance CEO CZ has proven to be a level-headed voice of reason in the industry, and seems to have a reasonable outlook on the 'big picture' of cryptos future - so if he's accusing FTX or their CEO of crossing a line, it's probably true. 

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Author: Oliver Redding
Seattle Newsdesk  / Breaking Crypto News