We’ve somehow managed to survive a CRAZY WEEK of some unfortunate and kinda…weird unfolding events, and we can all agree that despite all the chaos, a few important lessons were learnt. 📝
This week, we’ll mostly talk about the whole SBF-FTX situation and spill a week-long worth of tea, along with some quick updates from the Web3 world. Here’s what we have for you 👇
Quick Numbers and News
What happened with FTX?
Estimated reading time: 04:14 mins
Weekly Wrap: Numbers & News 🗞
Quick web3 updates curated for you:
Drift becomes the first artist to mint and sell an NFT on Instagram.
India's Enforcement Directorate asked Binance to freeze 150.22 bitcoins as part of a money-laundering investigation.
Google's cloud computing division Google Cloud announced that it's now running a validator on the Solana blockchain.
Andre Cronje's rumoured return sparked a positive performance for Fantom, which surged by over 17%.
OpenSea pledges to enforce NFT royalties after creator backlash
SBF lost everything & perhaps set crypto years back.
It took an article and a tweet to break the camel’s back. 📉
On November 2, Coindesk released an article showing holes in Alameda's (FTX’s sister company) balance sheet. Following the buzz of this revelation, CZ (CEO, Binance) tweeted:
💡 In 2021, FTX bought out Binance’s share in the company. Of the $2.1b exit, a good sum was paid to Binance in FTT. While Binance owned 7.5% of the total FTT supply, Alameda held ~$6b worth of FTT on its balance sheet, but the market cap for FTT was ~$3.5b.
No matter how much Caroline (CEO, Alameda) & SBF tried to get back at CZ and reassure people, their fate was sealed. Everyone started selling; FTX saw huge withdrawals (over $6b in 72 hours).
And soon, CZ announced Binance buying out FTX. But, after discovering holes in FTX’s books, Binance dissolved the deal.
What happened between the lines?
In 2017, SBF founded Alameda Research and, 2 years later, launched FTX.
Then birthed FTT.
Alameda used its FTT as collateral to borrow from FTX (ahem, customer funds). If Alameda's investments go south, or the FTT collateral starts to dump in value, then Alameda goes down, and it pulls FTX down with it.
The same thing happened with Luna, the collateral used to back the UST stablecoin. When it faced downward sell pressure, it caused the whole system to break.
What is the “hole” in sheets everyone is talking about?
The Head of R&D at CoinMetrics, Lucas Nuzzi, wrote a thread about the possible hole, like the $10b of customer funds SBF moved to Alameda. And it’s CRAZY.
SBF also used this fortune to become the #2 biggest donor to the Democratic party in 2021-2022 and bail out crypto firms
Soon after there was no hope left for FTX, SBF released the worst apology in history:
Here’s what happened after, which we still can’t wrap our heads around 📝
FTX and Alameda Research have all begun filing for bankruptcy. SBF is out as CEO.
FTX resumes withdrawals only in the Bahamas (where the main employees and SBF live).
Bahamian residents created NFTs, sold them within the FTX marketplace at inflated prices to non-residents, then withdrew the cash for the buyers (with $100k fee), and Bahamas SEC shut this down.
And here is the most mind-boggling “alleged” tea of all 🤯
Turns out, SBF was reportedly dating Caroline, Alameda CEO.
The new CEO, John Ray III, was the lawyer brought on to clean up Enron.
SBF invested in the VC funds investing in FTX.
Their Bahamas HQ served as a mansion for SBF & all his closest friends/employees lived & ran their scheme.
Former employees leaked information about drugs, fraudulent pasts and backdoors for moving funds.
Now, there is a lot of speculation going on Twitter about this team being behind previous crashes and more. This whole saga has crypto critics bashing and the ecosystem crashing.
It will take a while for the market to recover and for people to establish their faith in crypto again.
Also, did we mention SBF might be on the run? ✈️ Yeah.
Wanna get deeper into the SBF rabbit hole? Here you go:
warning: from striking political connections to Epstein rumours, this keeps getting messier.
The best thing that might come out of this would be regulations in the ecosystem. And, ofc, Twitter had a field week.
Laugh the pain away. 🙃
While everything feels like the market might never recover, it will. Let’s take some time to celebrate builders & communities building despite everything. Those who build for all are the real G. 💪
A bear market builds great products and communities, which build bull markets, and here are two efforts from the community:
For developers, from Biconomy 🧡
We deserve better UX in web3 & developers deserve better tools.
❌ Wallet management
❌ Complex transactions
❌ Onboarding time >> Usage
❌ Weeks to build agnostic dApps
Amidst the chaos, there’s good news!
With BiconomySDK, developers can build without limits, for a limitless ecosystem. Be ready for superior UX & dApps that ship faster; launch on November 15th.
After all, amazing developers do deserve amazing tools.
Brunch w Buildooors 🍽
The Product House has teamed up with Polygon to embark on a journey to Road to ETHindia with an invite-only offline mixer for the best minds in web3 across India. 🇮🇳
If you’re a Buildooor in Web3, this event is for YOU! Check out all the amazing perks of the mixer here, which includes copping this stunning NFT ✨
BwB is coming to Mumbai on November 19th, lesssgo!
That’s a wrap for This Week in Web3, see you next week! 🚀
If you’re an early-stage web3 builder going from 0 to 1, holler at our creative-capital studio Spacekayak and let’s create something extraordinary through design! ✨
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Have you all been tracking the wave of tax-loss harvest tools for the millions of worthless NFTs out there? I came across unsellablenfts.com - it feels like a harbinger of the times. Nothing says crypto winter like people paying to get rid of their worthless investments lol