…“The fact that Sam was willing to do this deal suggests that FTX was deeply impaired in terms of the run on the bank that began in the last 48 hours,” said Carter. “We don’t know exactly what the issue was, whether they were lending out or gambling with user deposits.”… (CNBC Crypto World 11/8/22)
‘Sam’ in the above quote is FTX CEO Sam Bankman-Fried.
Over the weekend the CEO of Cryptocurrency platform Binance, Changpeng Zhao (CZ), informed his 7 million followers on Twitter that his company was going to liquidate all holdings of FTT. FTT fell from $25 to $16 after CZ’s tweets and then on Tuesday fell to mid single digits when Binance said that they would sign a ‘non-binding Letter Of Intent (LOI)’ to purchase FTX.
2 Billion Dollars of Market capitalization was wiped out in the course of one day.
Talk about the potential for a ‘Mr. Potter’ to swoop in and buy the Bedford Falls Savings and Loan for pennies on the dollar. In this case Binance is Mr. Potter and FTX is the potential George Bailey who may have an ‘Uncle Billy’ event unfolding if the speculation in the CNBC article is substantiated…
George: Hey, Merry Christmas, Mr. Potter!
Potter: Happy New Year to you, in jail. Go on home, they’re waiting for you! (https://www.quotes.net/movies/it’s_a_wonderful_life_5869)
Are they waiting for Bankman-Fried? Think I’m being a bit dramatic?
When a principle in the industry says:…“It’s probably the most dramatic deal I’ve ever seen in the history of the crypto industry,” said Nic Carter, a partner at Castle Island Ventures’…(CNBC Crypto World 11/8/22)…it’s dramatic!
And then goes on to say …“The fact that Sam was willing to do this deal suggests that FTX was deeply impaired in terms of the run on the bank that began in the last 48 hours,” said Carter. “We don’t know exactly what the issue was, whether they were lending out or gambling with user deposits.”
In ‘A Wonderful Life’, Mr. Potter pointed out that everyone knew that George Bailey had been lending money to Violet Bick. He also inquired of George if he had been playing the market with the S&L’s money. Mr. Carter may be speaking for Potter in this case but he is essentially asking the FTX CEO the same questions.
Numerous other crypto firms have already collapsed this year including Celsius, Voyager Digital and Three Arrows Capital. Much of the stories that surround these situations are not good or heart warming for investors. In the case of FTX it may cascade because a ‘sister’ company, Alameda Research, has a high concentration of FTT that apparently involves leverage. That could mean a massive Margin call.
How many others are using leverage with the FTX token? How much will they be forced to sell to meet a margin call? How far can this waterfall cascade in the crypto markets and beyond?
Whether Mr. Bankman-Fried of FTX has as devoted a wife and customers as George Bailey did, I do not know, but it appears that he may need them. And pronto. And a guardian angel wouldn’t hurt -but the truth might.
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Stan Szymanski (or Encouraging Angels) is not a medical doctor. This is not medical advice. In all matters pertaining to the health and care of a human being consult a medical doctor. This is not legal, financial or personal advice. Consult appropriate professionals in those fields for that type of advice.
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