Crypto is CRASHING because of FTX

Wow, so much has happened and I guess I wasn't really understating yesterday that this is the biggest disaster that crypto has pretty much ever faced. So the biggest update, obviously, is that Binance backed out of the deal to acquire FTX. This means that FTX is going down in flames and taking billions of dollars worth of consumer funds with them. And it's not just consumer, but also projects, market makers, industry professionals, everything is going down in flames of FTX. All right, guys, as I'm editing this video, it seems like I have a smile on my face. It's not out of happiness. It's out of pure hysteria. Almost, I feel like, you know, I guess sometimes you can only respond to shocking events like this with humor. And I guess, yeah, that's how I'm dealing with it. Officially, what Binance posted is as a result of due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided not to pursue the potential acquisition of FTX.com. And this is actually quite important as well in another way, too, because typically speaking, due diligence process to acquire an exchange or something like that, it would take weeks, if not months of time to complete. But for Binance, this was like less than 24 hours. They took an initial glance at the books and they're like, yeah, it's can't do anything about that. Time to back out, guys. I mean, even CZ here, it's like sad day tried, but it's too far gone. It's too far gone. That's how messed up this is. That's how messed up the books on FTX side is. Right. I mean, if it was remotely good, they could have at least tried or at least try for a week. Right. But this was less than this was like an hour's time frame. So that's how messed up and that's how crazy things are. So, I mean, obviously, everyone now is digging through what's happening. And, you know, conservative estimates puts the loss at perhaps four billion dollars. I think that's what most media outlets are reporting. But more realistically, as we talked about yesterday, the real transaction, the real smoking gun here was this movement of eight billion dollars worth of FTT. So very likely the hole is around eight billion dollars. And this eight billion dollars isn't just any money. It's actually our money. It's money that users like me have put into the exchange and they have no right in touching that. Right. They are basically stealing user funds. And the crazy part is that FTX has always stipulated that they never touch user funds. They never touch money that people. I mean, it's logical. Right. Like this is not yours. This is our money. All right. So, yes, for the social, I am affected. I've used FTX as pretty much my fiat gateway. And the crazy part is this. Right. I mean, my story is even crazier because in Hong Kong here, it's actually quite hard to transfer from other crypto exchanges, funds from crypto exchanges. Banks typically do not like crypto. But because of just recently how much news, attention and fame FTX has gotten, it's actually really easy to transfer funds from FTX to banks and vice versa as well from banks into FTX. So it kind of served as my fiat gateway. And there was so much trust there. They were building up trust with both with regulators in Hong Kong. And I mean, to point to point things out, in Hong Kong FinTech Week, which is very closely related to government, this was a way for Hong Kong financial institutions to really push Hong Kong's finance, which is the biggest industry in Hong Kong forward. And Sam Bankman-Fried was really the number two speaker. They were actually number two on the agenda. And that really goes to show how much Hong Kong was going to push forward this crypto agenda. So, yeah, now he's exposed as a fraudster. I mean, there's no other way to explain why he can't pay back and allow user withdrawals at this current point in time. So essentially, he had a master key that allowed him to use our funds, user funds, whenever he wanted to. And yeah, it's gone now. It's vaporized. So, man, that's quite hard to take in. So at the end of the day now, I think this, obviously, I think a lot of people really commented in the last video that you look upset, you know, obviously. And it's upset for really two reasons. Yes, I was affected. But also, I'm more affected not just because of my funds, but also about the impact to the industry. I mean, if you think about it, look at who invested into FTX. Even freaking out, the Maysec, the Singaporean government fund that invested into FTX, right? So this is going to send crypto regulation back to Stone Ages. This is going to draw so many regulators on this. And in fact, let me just look at this video with you guys here. So Sam was speaking in front of essentially U.S. lawmakers here. Let's. Last thing that I'll say is if you look at what precipitated some of the 2008 financial crisis, you saw a number of bilateral bespoke non-reported transactions happening between financial counterparties, which then got repackaged and releveraged again and again and again, such that no one knew how much risk was in that system until it all fell apart. If you compare that to what happens on FTX or other major cryptocurrency venues today, there is complete transparency about the full open interest. There is complete transparency about the positions that are held. There is a robust, consistent risk framework applied. And we're excited to work with the CFTC on our U.S. licensed and regulated venue to bring a lot of this. Last thing that I'll say is if you look at. I mean, the nerve of this guy, right? He's essentially criticizing the financial system, but doing the exact same thing. Right. And the worst part is he was using user funds to do this. It's like, holy shit, this guy is such a good liar. And I guess almost everyone fell for it. This is this is the crazy part. Like in front of lawmakers, he lied flat out. I mean, being exposed so quickly. Right. How many people, how many regulators are going to come chase after crypto now? Like no one wants to be made a fool like this. Right. They were he essentially made a fool out of them. He lied in front of them in public. Sure. This might be a year ago, but he's pretty much doing the exact same thing. He was capable. He's crazy. Oh, my God. So I think that's the other sadness here. Really, it's not just about, you know, what's happening with me personally, but also what's going to happen to our entire industry as a whole. Right. Do you think Singapore is going to be friendly to crypto from now on after the government funds invested in FTX? And essentially that got turned to zero. And yeah, it is zero. I mean, FTX is pretty much worth zero now. And like we pretty much have Sequoia, one of the investors of the FTX exchange in the previous round, and that was valued at $32 billion at that point. They pretty much went to say, yeah, we're marking our investment to zero. You know, we know it's over. Did I even they were like pretty much flat out blank about them? And this is where I have respect for Sequoia as well. Right. They sent and they sent a message. They didn't even make like a long thread. They're just like, you know what? It's zero now. We know. We know. You know. We know. Everyone knows it's zero now. It's gone. It's wrecked. Bye. Right. Like crazy. So I guess I guess I guess that's the insanity of this. Right. And I guess I feel especially strong here in Asia because a lot of people were invested into FTX and FTX was strongly pushing regulation here. And actually quite strongly in the U.S. as well. Remember, you know, they were Sam Backman-Fried was meant to be one of the top donors for Joe Biden. He donated heavily into this midterm election. Right. And now people he's essentially exposed as a fraud and a scammer right now. That's that's the insanity of this. So no one wants to be made like a fool like this. People are going to be out for blood and that's going to affect crypto. So, yeah, I'm not too happy about this current situation. Markets, to be honest, today, it's still recovering. I think the shock has passed. Right now, as of making this video, I think the major relevations are gone. I think we kind of know all the information we need to know. The biggest uncertainty that I see on the markets right now is with Tether. So this is the fear that's coming up next because one because everyone's kind of psyche is shaken. People are now questioning and making bank runs everywhere. Right. Like if FTX can fall like that, can exchanges fall? Can Tether fall? And everyone's retesting this again. So this this is going to be on for the next few weeks. I'm not going to defend. I'm not going to comment anything on Tether. I would think, you know, this is going to be a little bit scary. I don't want to hold Tether, to be honest. It's just unnecessary risk we find at this point. But this will be tested. Right. And it'll be tested over the next few days and next few weeks to see if people can withdraw from Tether. And if they can get actual U.S. dollars out and if they are able to float. So, yeah, that's going to be crazy. Exchanges are also going to be affected as well. Top exchanges. People are going to make withdrawals. I mean, at the end of the day, the safest place to put your crypto is either in a ledger or in a treasure. Sorry, I'll put them the wrong way to order out. But hardware wallets are the key. And this is living proof of that. This is the McMontgox incident level. I think this is like 10 times Mt. Gox. So, yeah, just contagion there. And obviously, the next biggest contagion is not just with exchanges, but with various projects in the space that either Alameda is touching or has different market makers that have exposure to Alameda. We start seeing different exchanges post up. We're starting to see every exchange post up how their funds are stored and how much of it is there. So their finance immediately pretty much posted their fund transparency in response to this, just to hope to their community that people won't make withdrawals. But, you know, as we've learned here, if it's not in your hardware wallet, it's not your crypto. All right. That's just a simple fact. Now, I would also say at this current point, nothing is safe. I think it's pretty clear that as a community, we can't trust anyone's word anymore. I think we all learned that here. And I've seen a lot of different projects and something like, you know, Jump Capital or Amber Group. They're trying to post up and say, you know, we weren't as heavily affected by FTX's collapse. But I think everyone's going to be skeptical at this current point. So we don't know how much damage the market makers have experienced from FTX collapse. Because we know that because market makers needed to use FTX to tap into their liquidity, they very likely have funds on that exchange. So this might be market makers for different projects and reputable projects in this whole space. So the contagion effect will spread in that area as well. So exchange other exchanges, other projects. Next thing is funds, of course. So a lot of funds kept fun. Different crypto funds kept money in FTX. So, yeah, that's going to be a factor as well. Because as people get scared right now, everyone's going to ask, you know, these funds, hey, is our funds safe? Well, at this current point, no one knows. And this is going to drastically affect how high net worth individuals or different pension funds, even like something like that. We've seen pension funds having their balances on FTX. That's going to cause so much scare in that space. It's not even going to be funny. So, yeah. So this is going to send crypto back quite a few years, to be honest. So, yeah, I mean, that is that. Let's see how things play out. Obviously, I'm still looking at it. But I'm definitely, honestly, not too hopeful of a quick recovery of funds from FTX. I feel like at this point, it's extremely hard to save them. And the fact that Sequoia already just went on preemptively, marked them down to zero, just goes to show that, yeah, that's pretty much they've significantly collapsed. And I guess the slap, the injury here, the slap on our face is apparently people have recently discovered that Alameda Research is still trading. I don't know how this happened. I mean, quick summary of how this whole exchange situation collapsed is that the funds, user funds were used to kind of cover for the losses on Alameda Research's part. And, yeah, I don't know how they can still function at this current point, the nerve of these guys. But it is what it is. I mean, the comment here was like, WTF, how is Alameda still trading with our money? And some Andrew Lloyd says, I thought Eve says, because you gave it to them. Can't argue with that, right? So anyways, I think that this is going to be a Netflix documentary in the future. I think this is beyond insane. Never in a million years would I dream that someone who is logical would risk a well-running business like FTX was making money, right? They had trades going on. They were in exchange. They made money. They were making money. They were sponsoring various events to prove that. Never in a million years would I imagine that Sam will risk a good business like that to save his fund, to save Alameda Research, to use user funds to bail out Alameda Research after pretty much Alameda collapsed in quarter two of this year. So never would I have imagined that to happen. There you go. Anyways, guys, I'll be making more videos to update you on this. Obviously, I'm still a little bit angry, to say the least, about the recent order of events. I hope you enjoyed this episode. I hope you enjoyed these very honest updates with kind of the latest updates of what's going on. If you do, make sure you subscribe to this channel. I'm still in crypto. I will be in crypto. I believe this is the future. I believe that. I mean, it's kind of funny because Sam also touched DeFi, but I actually do believe that DeFi is the way, just not the way that we were building it previously. There needs to be a lot more transparency in what's going on. We could definitely not take founders' words for why funds are being transferred, what's going on. We see actions on chain, but we should never trust people. I think that's one of the lessons I've learned from this. And yeah, we are moving forward. And this is not the first time Bitcoin or crypto has died. And it will survive and it will die again. It will survive and we'll get stronger from it. So guys, thank you so much for watching this episode. Hope you guys are doing well. Peace. See you in the next one.