Inside the Frantic Texts Exchanged by Crypto Executives as FTX Collapsed

Inside the Frantic Texts Exchanged by Crypto Executives as FTX Collapsed

The day before FTX filed for bankruptcy, founder Sam Bankman-Fried obtained an “alarmed” text message from Binance CEO Changpeng Zhao, reports the New York Times:

Inside the Frantic Texts Exchanged by Crypto Executives as FTX Collapsed

Mr. Zhao became worried that Mr. Bankman-Fried was orchestrating crypto trades that might ship the enterprise right into a meltdown. “Stop now; do not motive extra harm,” Mr. Zhao wrote in a set chat with Mr. Bankman-Fried and different crypto executives on Nov. 10. “The more harm you do now, the more prison time you’ll serve.” FTX and its sister hedge fund, Alameda Research, had simply collapsed after a run on deposits uncovered an $8 billion hole within the fund’s accounts. The implosion unleashed a crypto crisis as corporations with ties to FTX teetered on the brink of bankruptcy, calling the destiny of the whole enterprise into question.

The collection of approximately a dozen institution texts among Mr. Zhao and Mr. Bankman-Fried on Nov. 10, which have been acquired with the aid of The New York Times, display that key crypto leaders feared that the scenario ought to get even worse. And their frantic communications offer an unprecedented glimpse into the unusual way enterprise is carried out backstage within the enterprise, with at least three top executives from rival corporations exchanging messages in a set chat on the encrypted messaging app Signal.The texts also show that business leaders were acutely aware that the actions of a single organization or fluctuations in the value of a single digital currency could destabilize the entire enterprise.The exchanges have become more and more irritating as Mr. Bankman-Fried and Mr. Zhao traded barbs.

Earlier that week, Mr. Zhao had agreed to shop for FTX and store the change rather than take flight from the deal. In the Nov. 10 texts, he seemed positive that FTX could now no longer survive and worried that it may carry the relaxation of the enterprise down with it. Mr. Zhao accused Mr. Bankman-Fried of using his hedge fund to pressure down the price of Tether, a cryptocurrency known as a “stablecoin” because its value is designed to remain constant at $1.According to messages seen by The Times and those familiar with the situation, the institution chat encompassed a number of different notable crypto executives, including Jesse Powell, a founding father of the crypto exchange Kraken, and Paolo Ardoino, the chief executive officer of Tether, the company that manages the stablecoin of the same name.

Tether is a linchpin of crypto buying and selling worldwide, normally utilized by virtual asset fanatics to conduct transactions. Industry insiders have long feared that if Tether’s rate fell, it might cause a domino effect that could bring the enterprise to its knees. (In the end, Tether did not grow to the point of dropping its $1 peg.)

30-yr-vintage Bankman-Fried told the Times that Mr. Zhao’s claims have been “absurd.” “Trades of that length could now no longer have a cloth effect on Tether’s pricing, and to my expertise, neither myself nor Alameda have ever tried to deliberately depeg Tether or every other stablecoin… “I made some mistakes over the last year, but this isn’t one of them.”

A spokeswoman for Tether told the Times that they’d “verified its resilience to attacks,” including that FTX’s moves “do not replicate the ethos and dedication of a whole enterprise.”


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