A mind-blowing FTX report 😱; Mercedes-Benz is a FinTech company! 👀; Bitcoin is so back? 😎
FinTech is Eating the World, 12 April
Hey Everyone,
Good morning! Today’s issue is the best one yet 👏 We’re going to look at the mind-blowing FTX report (it’s wild!), Mercedes-Benz which is actually a FinTech company (& why their strategy makes sense), and obviously Bitcoin, which is so back (a look at the data & what might be next). Let’s jump straight into the fascinating stuff 🌶
A mindblowing FTX report 😱
New report 🔖 FTX's new management has released a crazy new 45+ pages report that delves into the failures leading up to the exchange's bankruptcy.
Let’s take a quick look because it’s nuts. Literally.
More on this 👉 Here are the 10 most shocking takeaways highlighting how badly FTX was run:
Hubris, incompetence, and greed were some of the root causes that led to FTX collapsing as quickly as it had grown.
Sam Bankman-Fried (SBF), Gary Wang, and Nishad Singh controlled almost every aspect of FTX — despite the fact they were fresh out of college and had little experience in risk management and running a business.
One executive stated that if Nishad got hit by a bus, the whole company would be done. In other words, the concentration of power was crazy.
Anyone who tried to challenge SBF was rebuffed. In one case, the President of FTX US was told to apologize to SBF, and his bonus was cut after he raised basic governance questions.
56 FTX entities did not produce financial statements of any kind. 35 entities used QuickBooks as their accounting system and relied on a mix of Google Docs, Slack, shared drives, and Excel spreadsheets to manage assets and liabilities.
In internal messages, SBF described Alameda Research as "unauditable," writing: We sometimes find $50 million of assets lying around that we lost track of; such is life.
Expenses and invoices were regularly submitted on Slack — and were approved using emojis. Yup 😳
FTX configured the codebase to grant Alameda a limitless ability to trade and withdraw from the exchange regardless of the size of its account balance, and to exempt Alameda from the auto-liquidation process that applied to other customers.
Neither Singh nor Wang had the training or experience to handle FTX's cybersecurity needs — and the company didn't have a chief information security officer or anyone with the skills to fulfill the responsibilities of such a role.
Virtually all crypto assets were kept in hot wallets connected to the internet, meaning they were far more susceptible to hacking, theft, misappropriation, and inadvertent loss.
That’s not it. On to the crazy part!
✈️ THE TAKEAWAY
What’s next? 👀 Despite all of this, bankrupt FTX has recovered $7.3 billion in assets and is considering relaunching the digital asset exchange in Q2 this year 😳 According to recent reports, the exchange that was at the epicenter of one of the biggest financial scandals ever committed, officially recovered $1 billion in both cash and digital assets. More importantly, a bankruptcy court hearing that took place today noted the increase in recovered funds. A recovery effort that saw an increase of more than $800 million since January. The crazy part? FTX is considering restarting the exchange in the second quarter of 2023. Less than 6 months ago, John Ray, the new CEO hired to oversee the bankruptcy process, called FTX a bigger fraud than Enron. Would you trust FTX if it relaunches?
ICYMI: The mindblowing collapse of FTX-linked stocks 🤯 [+6 bonus reads]