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Comment by ramish94 | Hacker News Reader

I’m a little ignorant to the whole crypto ecosystem, so can someone give me a quick rundown on the chain of events that led to this? Seems a little out of left field.

BTX, from the outside looking in, looked to be one of the more well run, stable crypto exchanges. $1.02 billion in revenue with $388M in net income in 2021. They didn’t go on any crazy hiring spree when they didn’t have to. Liquidity crisis implies that people are withdrawing cash they do not have, but if so, where did it go?

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FTX bet customer funds through the CEO’s hedge fund on an FTX token [1]. The token price fell when this was revealed [2].

The hedge fund, and thus FTX, had less money than they owed lenders and customers. FTX found a bail-out in Binance; otherwise everyone would have lost their money.

[1] https://www.coindesk.com/business/2022/11/02/divisions-in-sa...

[2] https://www.coindesk.com/markets/2022/11/08/ftt-plummets-as-...

It isn't officially a bailout. They just said they intend to acquire FTX. But, once they look at the books they may backout out the deal, especially if most customers want to take their money out. What is the point of buying an exchange that has no customers?

> isn't officially a bailout. They just said they intend to acquire FTX

That's a bailout.

> once they look at the books they may backout

It's not a done deal. But the proposal is a bailout, through and through.

The point is the same reason why FTX bought all the smaller crypto firms that were about to collapse.

Preventing exposing the entire crypto currency ecosystem as fraud.

FTX's ceo also runs a prop trading firm which is the real source of his wealth. FTX loaned the trading firm billions of its own token FTT. FTX also gave binance billions of dollars of FTT because binance invested in them. Over the weekend FTX's ceo and Binance's ceo got in a fight on twitter and binance sold all of their FTT which collapsed the price. FTX's assets are tied up in the loans to their trading firm which are denominated in the now essentially worthless FTT and so they can't convert the FTT to cash which means can't process withdrawals.

> so they can't convert the FTT to cash which means can't process withdrawals.

That implies they embezzled customer funds (customer deposits should never be invested or loaned or intermingled with company funds)

I can't help you but all I can say is empires rise and fall faster than a house of cards in this space.

https://techcrunch.com/2022/11/07/heres-the-rundown-on-the-b...

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