FTX is much worse than anyone imagined 🤯🤯🤯; Ether, the ultrasound money? 🤑; YouTube to double down on Social Commerce. You should too 🛍
FinTech is Eating the World, 17 November
Hey Everyone,
Happy Thursday! Yesterday’s issue was massive, but today’s - it’s something we haven’t seen since Enron… We’re going to look at FTX which is so much worse than anyone imagined (the lies, the fraud, the Ponzi & more!), Ether that could be the ultrasound money (it’s huge! + 2 bonus reads), and YouTube that’s about to double down on Social Commerce (if you’re a FinTech, you should too!). Let’s jump straight into the burning stuff:
FTX is much worse than anyone imagined 🤯🤯🤯
Breaking🔥 Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information - John Ray, the new CEO of FTX.
Ray has overseen some of the biggest bankruptcies ever, including the collapse of the energy giant Enron, and has 40 years of experience in restructuring companies. He said he had never seen anything as bad as FTX. That tells you a lot.
More on this 👉 Today a 30-page FTX Bankruptcy court filing was submitted to the Delaware bankruptcy court. It’s hard to believe things at FTX were THAT BAD. Here are some shocking examples:
FTX lent Sam Bankman-Fried (SBF) >$1 billion for personal use. They also loaned the Director of Engineering Nishad Singh $543M. $1.5B just like that.
The crypto exchange used customer (!!!) funds to buy houses for workers in the Bahamas🇧🇸 Employees & executives put their names on homes purchased with company funds.
FTX didn't keep proper records of who they employed and what those employees did. Their total employee count was probably fake.
SBF made all business decisions on apps that auto-deleted everything after some time (Signal). He encouraged all employees to do the same.
FTX had no cash management system. Nobody had any idea how much cash was on hand at any given time, or even where all their cash was.
FTX didn’t keep any books or records of its digital assets.
Crypto assets deposited by customers weren't even recorded on the balance sheet.
The crypto exchange built software to hide the misuse of customer funds.
✈️ THE TAKEAWAY
There’s bad, and then there’s FTX Bad 🥶 FTX was supposedly worth $32 billion, it was backed by top-tier venture capital firms and grew into one of the biggest exchanges in the world. Yet, now it appears it had far less documentation, structure, and organization than any fantasy sports league. Zooming out, it seems that SBF is a massive fraud (not to mention that nearly every SBF public statement was false) and FTX was nothing more than a Ponzi. More importantly, given the fact that the guy who ran Enron as it was failing is now saying FTX is much worse, tells you all. The worst part is that it’s just the tip of the iceberg.
Bonus: The aftermath of the FTX collapse could be bigger than the earthquake 🌋
Contagion of contagion, or how Genesis could cause Crypto Armageddon 😳
WTF: Binance walks away from FTX takeover 😳🥶
Full court doc here.