This week on Crypto Twitter: the collapse of FTX as it happened, in tweets

Illustration by Mitchell Prefer for Decrypt

This week, the cryptocurrency industry witnessed one of the most sudden and devastating wealth contractions in financial history. Sam Bankman-Fried’s 16 billion dollars empire, which was built through its FTX stock exchange and hedge fund Alameda Research, went to zero in five days flat, going bankrupt 130 affiliated companies with it.

Of course, that was all Twitter could talk about. Not only was the world’s favorite microblogging platform a vital channel for people to express their thoughts on the subject, it also served as a battlefield and bulletin board for the crisis as it developed.

Thoroughly covering all the answers is a mammoth task that would be frankly impossible within the format of an article, so here’s instead a rundown of the most important works from all the major players along with the biggest third-party responses in the industry.

The drama began last Sunday when Binance CEO Changpeng Zhao said he would liquidate all of his exchange’s FTT tokens. FTT is the native token of FTX.

Several hours later, Zhao gave his reason for doing so.

The tweet caused a bank run as customers began withdrawing funds en masse from the exchange. A big 6 billion dollars exited FTX within the next 72 hours. To put that into perspective, the exchange normally handled “tens of millions” of withdrawals in an average day.

It became clear on Tuesday that FTX did not have the liquidity to handle withdrawal requests; withdrawals were put on hold and things got juicy when Changpeng Zhao stepped in to save the exchange.

Bankman-Fried also announced the bailout at the same time on his profile. Further down in the thread than him, it was thanking his lucky stars who had a friend like CZ.

Later that day, Zhao tweeted something that foreshadowed the events of the next day. She seemed to have cold feet.

Then the shock came on Wednesday:

Changpeng Zhao explained his reasons for the U-turn in a lengthy statement. He emphasized his assertion of him that none of his actions were part of a “master plan”.

In Bankman-Fried’s long apology thread the next day, he pointed out that he was trying to find alternative channels to increase the liquidity necessary to make all the depositors of the stock exchange intact. After twenty tweets, he congratulated Zhao.

The crisis ended on Friday with news that FTX filed for Chapter 11 bankruptcy. Alameda Research, along with the exchange’s US subsidiary. FTX.US and approximately 130 affiliated entities will also file for bankruptcy.

Bankman-Fried has now resigned from his role as CEO and seasoned bankruptcy attorney John J. Ray III will fill his shoes. Ray had previously guided Enron through its bankruptcy proceedings, an apt parallel.

Later that day, Shiv Shrivastava, CEO of the DeFi Palladium project, saw a bittersweet symbol of Bankman-Fried’s fallen empire from his balcony.

The industry responds

Throughout the week, several cryptocurrency companies have disavowed any connection to the beleaguered FTX, including Coinbase, Circle and Tether.

Brian Armstrong, CEO of Coinbase announced that his company held no FTT tokens or exposure to FTX or Alameda. Armstrong attributed FTX’s liquidity problems to “risky business practices, including conflicts of interest between deeply intertwined entities and misuse of client funds.” He also said lack of regulatory clarity in the US it has pushed consumers to offshore exchanges such as the Bahamas-based FTX.

Jeremy Allaire, co-founder and CEO of stablecoin broadcaster Circle, denied exposure to FTX. He agreed with Armstrong and framed the crisis as a temporary aberration in the cryptocurrency journey towards wider adoption and becoming something with utility rather than speculative value.

Jesse Powell, the former CEO of the Kraken stock exchange, said some very stinging words about Bankman-Fried and its venture capitalists.

Su Zhu, who co-founded cryptocurrency hedge fund Three Arrows Capital (3AC), one of the first victims of Crypto Winter, wanted Bankman-Fried to know he wasn’t alone.

Famous whistleblower Edward Snowden thinks FTX was a disaster from the start, along with Binance and Kraken.

Republican Tom Emmer wanted people to know that Bankman-Fried may always have received help from regulators.

And Twitter CEO Elon Musk said Bankman-Fried activated its “bs detector”.

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