If you haven’t been living under a rock, you will have read the disastrous saga of Sam Bankman Fried (SBF) by now. His exchange, FTX, and trading firm Alameda Research collapsed in spectacular fashion. Within days. Very few know what happened exactly. Even among crypto natives there is scattered consensus about who or what caused this. These behemoths were considered too big to fail at one point of time.
What is clear right now is that Alameda had siphoned customer funds from FTX to make big bets that didn’t go as planned. Investigating agencies are currently looking into the details of the case. And building a prosecution.
Had it not been for CT (Crypto Twitter) though, many of these details may not have seen the light of day. Or as quickly as they did. For months SBF had antagonised crypto OGs by talking down Bitcoin and lobbying against DeFi (Decentralised Finance). His personal branding focused marketing campaigns were deemed unbecoming as well.
Big media puff pieces on SBF were in stark contrast to how Binance’s Changpeng Zhao (CZ), Coinbase’ Brian Armstrong or Kraken’s Jesse Powell were often treated in news stories. Media wasn’t usually kind to crypto personalities, much less publish hagiographies (1, 2) about them.
SBF made frequent appearances in Capitol visits, Senate hearings, regulator roundtables. A privilege not afforded to many others in crypto. Something just didn’t seem right but CT couldn’t put a finger on it. Here was a relative newcomer who was suddenly being thrust as crypto’s poster child in media and political circles. There was growing uneasiness among crypto natives with a self-appointed spokesperson whose stances were quite opposite of core crypto ethos. It was CoinDesk’s scoop on holes in Alameda’s balance sheet that broke the camel’s back. SBF/FTX/Alameda came crashing down soon after.
Details of billions in fraud and trading losses came to the fore and grabbed major headlines worldwide. Scandalous leaks revealed long-running drug abuse, polycule relationships and ethical malpractices. Unbeknownst to many though, there was another dramatic subplot that had played out in parallel. One that will make for an even more entertaining retelling of the fall of FTX. A sequence of events that can be speculatively pieced together into a side story of revenge and retribution. A story that has many similarities to the 1988 Bollywood classic Khoon Bhari Maang. This is that story.
Act I: Sanjay wrongs Aarti
Sanjay, who has recently arrived in India, makes acquaintance of a rich woman, Aarti. He feigns romantic interest and gains her confidence. With a plan to inherit her wealth, Sanjay pushes Aarti into crocodile-infested waters.
Mid-2019: A young gifted trader named SBF starts FTX, a derivatives exchange. As a relatively new kid on the block, SBF seeks funding and liquidity for FTX and reaches out to investors. Sometime later, reports of an attack on Binance's futures platform emerge. The identity of the attacker becomes a subject of speculation. CZ indicates he might know who it could be but doesn’t disclose it and seems to move on.
Act II: Aarti befriends Sanjay
Aarti returns in disguise and befriends Sanjay who is now indulging in his ill-gotten fortune.
Late-2019: Binance makes an investment in FTX and its native token $FTT.
2020 - 2022: SBF becomes the blue-eyed boy of media and politics as he goes about courting regulators, buying up luxury properties and private jets and splurging millions on sponsorships, advertisements, events and political donations.
Act III: Aarti's revenge
Aarti goes after Sanjay’s accomplices, some of whom turn against him. In a final act of poetic justice, Aarti knocks Sanjay into the same waters and looks on as he gets ripped apart by crocodiles.
Late-2022: CoinDesk breaks the news that Alameda may be insolvent. Days later, CZ announces plans to liquidate Binance’s massive $FTT position. Alameda tries to unsuccessfully negotiate a rescue plan and ends up adding fuel to the fire that FTX and related parties may be toast. Thereafter FTX halts withdrawals, $FTT crashes and Alameda’s site goes private.
This is closely followed by SBF’s resignation, FTX/Alameda’s bankruptcy filings, freezing of assets, allegations of fraudulent practices, culminating in his arrest. Subsequently his partners turn against him. Days before disaster SBF had gloated about his access to American politics while taunting CZ. In a twist of fate, he now finds himself extradited to the US to stand trial and for further investigation by federal agencies.
The End
NOTE: This piece is derived from my tweet thread on the same theme.
Disclaimer: None of the information mentioned above should be construed as financial advice.