Is Crypto Dead???????

My personal opinion is absolutely not. But what happened this week in the crypto space is eye opening on the behind scenes aspects of crypto that have to change. 

So what happened....... Lets dive into that!

FTX, what was once just a little more than a week ago, considered one of the most stable companies in the crypto space has gone belly up. (what the hell, how?) 

Yes you read that right. FTX is completely out of money. Their founder Sam Bankman-Fried (pictures below) has resigned and appears to be fleeing on a private jet.

Just one month ago Sam Bankman-Frieds net worth surpassed 40 billion dollars. 

Let me show you just how much money that is 

$40,000,000,000 

Today his net worth (if anything) appears to be in the negative. 

So what exactly happened. Well the entirety of the story I am sure will play out in court someday and possible (hopefully) a Netflix documentary/movie, but I will do my best to cover the story as I see it. 

Just a few weeks ago rumors began swirling that some of FTX's finances were not as they appeared. As these rumors picked up steam SBF (founder) rushed to twitter to state that nothing was wrong and everything is under control (ah, the ole were doing just fine) 

Early this week it was announced that SBF (founder of FTX) had stepped down as CEO, and someone else was replacing him. It was then reported that FTX was seeing a massive decrease in user transaction and an extremely large increase in customers wanting removal of funds from their exchange. 

What does this mean exactly? Well FTX is an offshore crypto exchange. Think of it as a "bank of sorts" that handles transactions of peoples money. Someone like you or I would visit the FTX website to make a crypto transaction. We send FTX our money (US dollar) and they in turn give the crypto that we have selected. So a banking system of sorts. On top of that customers can buy sell and trade all types of different crypto currencies on their site and opt to leave their funds on the exchange itself. 

Now this is where it gets a little fishy. By any account FTX should have had enough liquid assets to cash out customers if they chose to remove funds from their accounts. 

But as reported this week FTX only had 1 billion in liquid cash and had 9 billion in liabilities. Thus they are bankrupt. Now how does a company this big with a multi billion dollar net worth founder let such a thing happen. Well they were offshore, thus not being regulated by any governing agency like all businesses are done that are housed here in the US. They had a small group of people hand selected by Mr. Fried that ran all of the day to day operations. They were based in the Bahamas and this select group called all of the shots. 

All in all it appears that as customers made their transactions on the FTX exchange the company did not then stash that money at 1:1 ratio. Instead they made high risk financial  plays with customers funds into whatever they chose. 

Thus when customers went to being removing funds from the FTX exchange early this week there were no funds to be removed. FTX had spent them all. 

Soooooooooooo, where do we go from here? I have no idea. What I do know is this. Bitcoin as a technology is not going anywhere. I think this is going to drastically affect the pricing of crypto in the coming weeks and maybe even months, but I am still an investor and plan on continuing to invest. 

Hope you all enjoyed this read and I was able to summarize at least a little bit whats going on in the crypto space this week!

Thanks 

-Logan Jones