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Bankruptcy Lawyers Say FTX Was Operated By ‘Inexperienced And Unsophisticated Individuals’

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Bankruptcy Lawyers Say FTX Was Operated By ‘Inexperienced And Unsophisticated Individuals’

On Tuesday, the attorneys representing FTX told the court that a “substantial amount of assets have either been stolen or are missing” and further stressed to the bankruptcy court that FTX executives left the lawyers James Bromley and Sullivan Cromwell with limited information. Bromley further likened the former FTX CEO Sam Bankman-Fried’s (SBF) crypto empire to his “personal fiefdom” and in the end, the attorney said, “the emperor had no clothes.”

Bankruptcy Lawyers Outline FTX’s Financial Issues, Lawyer Says Case Is One of the Most ‘Difficult Collapses in the History of Corporate America’

The Delaware bankruptcy court heard from FTX lawyers James Bromley and Sullivan Cromwell on Tuesday, and it seems FTX’s financial records do not look good. According to court documents, FTX has a cash balance of around $1.2 billion and this weekend a list of FTX’s 50 top creditors show the entities are owed roughly $3.1 billion.

However, the list of the creditors, at least for right now, remains confidential and names are redacted. According to a report from the New York Times (NYT), roughly 500 individuals logged into the court’s Zoom broadcast on Tuesday. At the hearing, Bromley told the court that a “substantial amount of assets have either been stolen or are missing” from the FTX platform.

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The attorney remarked that lawyers understand “many people that are looking to get their money back immediately,” and Bromley insists the team is “working towards being able to do that.” The attorneys had a lot of descriptions for FTX and Alameda Research executives, and Bromley called SBF’s empire his “personal fiefdom” that ended by showing the “emperor had no clothes.”

Restructuring executives and lawyers are looking to “bring order to disorder,” Bromley noted. FTX executives were also called “inexperienced” and “unsophisticated individuals.” Bromley’s statements echoed the commentary written by FTX’s new CEO, John Ray, who said the FTX bankruptcy was worse than Enron’s.

Bromley also told the court that FTX suffered from “cyberattacks” referring to when FTX’s wallets were hacked the day the company filed for bankruptcy protection. Bromley further mentioned that FTX’s headquarters moved around a lot in regions like Berkeley, California, Hong Kong, the Bahamas, and Miami.

However, despite the constant moving, FTX was “effectively under the control of Mr. Bankman,” Bromley detailed. FTX lawyers also detailed that the Bahamas-based joint provisional liquidators have agreed to transfer the case to the district of Delaware. Overall, Bromley said the FTX bankruptcy case represented “one of the most abrupt and difficult collapses in the history of corporate America.”

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alameda, Alameda Research, assets stolen or are missing, attorney, bahamas, Bankruptcy, Bankruptcy Case, Bankruptcy Creditors, Berkeley, california, collapse, corporate America, Court Filings, filings, FTX Bankruptcy case, FTX collapse, Hong Kong, James Bromley, John Ray, lawyer, miami, New FTX CEO, Sam Bankman-Fried, sbf, Sullivan Cromwell

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What do you think about the FTX bankruptcy case and the lawyer’s statements? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Alameda

Research: Genesis received over $1B worth of FTT from Alameda, FTX in last 3 months

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Research: Genesis received over $1B worth of FTT from Alameda, FTX in last 3 months

Research: Genesis received over $1B worth of FTT from Alameda, FTX in last 3 months Oluwapelumi Adejumo · 1 hour ago · 2 min read

Arkham intelligence dashboard shows that Genesis has been processing millions in stablecoin redemptions over the past few days.

2 min read

Updated: November 21, 2022 at 8:36 pm

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Cover art/illustration via CryptoSlate

An analysis of the Arkham Intelligence dashboard CryptoSlate Research shows that popular crypto lender Genesis received billions in FTT tokens from bankrupt crypto firms Alameda Research and FTX over the past year.

FTX’s FTT Transfers to Genesis (Source: Arkham Intelligence)

For context, Genesis received  $932.56 million worth of FTT tokens from FTX within the last three months, while it received $141.1 million worth of struggling tokens from Alameda Research during the same period.

The crypto lender recently halted all customer withdrawals due to the FTX’s collapse. Genesis stated that the incident resulted in “abnormal withdrawal requests” that exceeded its liquidity.

Meanwhile, reports revealed that the lender had failed to get an emergency loan of $1 billion from investors in the wake of the collapse.

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Meanwhile, the extent of FTX’s collapse on Genesis business is telling when one considers the value of trading assets under its possession.

At its peak, Genesis trading assets were almost $5 billion. As of press time, the firm’s trading assets are worth roughly $238 million, according to the Arkham Intelligence dashboard.

Genesis is processing large amounts of redemptions

On Nov. 16, a Genesis-labelled address processed its single-largest transactions. Arkham Intelligence tweeted on Nov. 18 that over $100 million in USDCoin (USDC) were transferred to the Genesis over-the-counter (OTC) address, and that address subsequently deposited $105 million USDC to Circle.

Arkham said this was likely a large customer that withdrew from the Genesis OTC platform.

Genesis OTC Stablecoin Redemption (Source: Arkham Intelligence)

CryptoSlate Research’s look at the Genesis trading dashboard on Arkham’s Intelligence platform showed that the large transaction was not a one-off. Instead, it was one among many such redemptions the lender had processed recently

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According to the dashboard, Genesis OTC has processed $250.9 million USDC redemption within the last seven days. During the same period, the OTC also processed $18.3 million USDT redemption and $20 million DAI redemption.

Cumulatively, the OTC processed roughly $290 million in stablecoin redemptions over seven days.

Source: Arkham Intelligence

Meanwhile, Circle is also seeing massive USDC redemptions for fiat as it has been burning millions of USDC.

Arkham Intelligence said USDC is burned when USD is redeemed as fiat. The dashboard shows that the stablecoin issuer has burned $100 million twice in the last 24 hours.

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Alameda

Multicoin Expects FTX Contagion To Hold Industry In Its Grips For Weeks To Come

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Multicoin Expects FTX Contagion To Hold Industry In Its Grips For Weeks To Come

In a letter to its investors, one of the industry’s most notable crypto venture firms, Multcoin Capital, has revealed its thesis for the coming weeks.

Managing partners Kyle Samani and Tushar Jain write in a 3,400-word letter that the FTX fiasco does not spell doom for the crypto industry, as critics like Peter Schiff and Nassim Taleb recently did.

“Just as Lehman Brothers didn’t kill banking and Enron wasn’t the death of energy companies, FTX won’t be the end of the crypto industry,” the venture capital firm said.

At the same time, the firm warns its investors that FTX’s collapse will cause more fallouts. Samani and Tushar wrote:

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We expect to see contagion fallout from FTX/Alameda over the next few weeks.

Many trading firms will be wiped out and shut down, which will put pressure on liquidity and volume throughout the crypto ecosystem. We have seen several announcements already on this front, but expect to see more.

According to Multicoin, leverage must first be removed from the system before there will be “green shoots next year.”

Multicoin Trusted FTX

Samani’s company also acknowledged its own mistakes, though. Thus, it had placed “too much trust” in FTX. As a result, Multicoin lost 15.6% of its total fund assets on FTX.

The venture firm was only able to recover about a quarter of its funds that were deposited on the exchange. Although waiting to see how the bankruptcy proceedings progress, the company expects to write down its investment in FTX to zero.

In doing so, Multicoin follows the fate of other investors in FTX, such as Temasek, Sequoia Capital and Softbank.

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Due to the loss of confidence, Multicoin said it is only trading on two other exchanges, Coinbase and Binance. For now, however, the company only relies on Coinbase custody and self-managed cold wallets, it said.

The Future Of Solana (SOL)

By its own account, Multicoin has invested a large amount in Solana (SOL). The token was one of the biggest sufferers in the FTX collapse, as SOL was one of FTX’s largest positions along with FTT.

On November 05, SOL was still trading at a price of $38.71 on Binance before the steep crash to currently $13.53 took place.

SOL saw an unprecedented drop following the first FTX rumors. Source: TradingView

Despite the heavy losses, Multicoin officially still believes in Solana’s long-term potential, according to its letter to investors. The venture firm said it’s holding its position and still expects a bright future for Solana, because the cryptocurrency has “one of the most vibrant developer communities.”

Based on our experience in 2018 and 2020, we learned that it’s not prudent to sell an asset during a short-lived crisis if the core thesis is not impaired,” the letter states.

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However, there is a juicy (unconfirmed) rumor circulating that Samani and Jain handled his personal funds differently. Allegedly, the general partners sold their personal SOL stashes near the top.

Unconfirmed: LP states that Multicoin GPs sold their personal SOL stashes near the top while refusing to sell for the fund and bull tweeting. They made lavish real estate and automobile purchases and have failed to return necessary $ to LPs for tax obligations.

Haters take note pic.twitter.com/uPONWcods3

— Evanss6.eth (@Evan_ss6) November 17, 2022

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3AC co-founder

Binance CEO CZ Calls SBF A ‘Psychopath,’ 3AC Co-Founder Accuses FTX, Alameda Of Stop Hunting His Hedge Fund

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Binance CEO CZ Calls SBF A ‘Psychopath,’ 3AC Co-Founder Accuses FTX, Alameda Of Stop Hunting His Hedge Fund

During a conversation with Binance CEO Changpeng Zhao (CZ) and the Milken Institute, the exchange executive called the former FTX CEO Sam Bankman-Fried (SBF) a “psychopath” for one of the tweets SBF wrote last week. CZ’s statements further follow the accusations stemming from Three Arrows Capital (3AC) co-founder Kyle Davies. The 3AC co-founder claimed that both FTX and Alameda Research “colluded to trade against clients.”

Binance CEO Tells Sam Bankman-Fried to Suit Up and Face the Music in Washington DC

Crypto industry executives are not too pleased with the former FTX CEO Sam Bankman-Fried (SBF) and in recent times SBF has been getting a lot of criticism. Binance CEO Changpeng Zhao (CZ) talked about SBF with the Milken Institute on Nov. 17, 2022, and he explained that he did not know why SBF considered Binance a “sparring partner.”

Binance CEO Changpeng Zhao (CZ) recently discussed the former FTX CEO’s comments on Twitter and said he should probably stop tweeting.

CZ says that when SBF reached out to the Binance executive, CZ thought it was about an over-the-counter (OTC) deal to buy FTT tokens. Then CZ noted that when SBF called the former FTX CEO detailed that they were in “big trouble” and the company was “looking for a buyout.”

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CZ was asked at the Milken Institute event why SBF would tweet and call the company Binance or CZ a “sparring partner.” The Binance CEO responded and said “I think only a psychopath can write that tweet.” In addition to calling SBF a psychopath, CZ further noted that he believes SBF should stop tweeting and noted that he should “put on a suit” to face the music in Washington D.C.

3AC Co-Founder Kyle Davies Accuses FTX/Alameda of Colluding ‘to Trade Against Clients,’ SBF Denies Accusations, Alameda Implicated in Celsius Failure

The Binance CEO is not the only person criticizing FTX and Alameda, as the co-founder of the now-defunct Three Arrows Capital (3AC) crypto hedge fund, Kyle Davies, accused FTX and Alameda of colluding against the firm.

SBF’s Alameda Research had been seen doing interesting trades on social media with crypto tokens like UST, LUNA, CEL, WAVES, and STETH.

Speaking with CNBC’s Kate Rooney, Davies alleges that “FTX [and] Alameda Research colluded to trade against clients” and further said: “We, [Three Arrows Capital], were hunted and our positions liquidated.” However, CNBC received a statement from SBF that said he was “shocked” about Davies’ allegations and said: “there’s no truth to their allegations here.”

Although, FTX and Alameda have been accused of stop hunting in the past and one Twitter thread saved to archive.org claims Alameda and FTX were involved in Celsius going under. The Twitter account Plan C says that when Terra’s stablecoin UST collapsed, “Celsius got out the door first, suffered the lowest loses and didn’t want any part of the bailout.”

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Dumb game woke westerns play

— Kyle Davies 🔺 (@KyleLDavies) November 16, 2022

Plan C insisted that after Celsius fled, Alameda and FTX got stuck holding locked LUNA and UST bags. Alameda was also accused of manipulating the price of WAVES and selling lots of Lido’s staked ether called STETH. Just before FTX filed for bankruptcy protection, SBF told the public that Alameda would sunset trading operations. Davies’ accusations show FTX and Alameda may have had more than just Binance as a so-called ‘sparring partner.’

Tags in this story

3AC co-founder, alameda, Binance CEO, cnbc, crypto assets, CZ, ftx, FTX collapse, FTX Sam Bankman-Fried, Hunting, Kyle Davies, LUNA, Plan C, Psychopath, Sam Bankman-Fried, sbf, sparring partner, STETH, Stop Hunting, Three Arrows Capital, Three Arrows Capital (3AC), UST, WAVES

What do you think about Binance’s CZ calling SBF a “psychopath” and 3AC co-founder Kyle Davies accusing FTX/Alameda of stop hunting his hedge fund? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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