Crypto collapse: it’s looking like a long, cold, contagious winter

And not just what we learned from Elon Musk’s text messages, which showed that as far back as this spring, the new Twitter owner was unsure whether FTX founder Sam Bankman-Fried actually had the billions in liquidity he claimed to have.

As Jacob Silverman’s tweet tracks, execs have been exiting SBF’s firms for months. Which brings us to the current situation.

Not content with buying his rival’s business, CZ has also taken a victory lap, implying that FTX was using its FTT token as collateral for borrowing. CZ drove down the price of FTT earlier this week by announcing Binance would sell all its holdings.

So Coinbase has $15 million in deposits on FTX “to facilitate business operations and client trades.” However, the company says it has no exposure to Alameda Research, FTX’s sister firm, and no loans to FTX.

On Twitter, Coinbase CEO Brian Armstrong chalks the FTX debacle, which resulted in a Binance buyout, up to “risky business practices, including conflicts of interest between deeply intertwined entities, and mis-use of customer funds (lending user assets).”

Current FTX implosion notwithstanding, how seriously should you take crypto, NFTs, and everything else blockchain? Molly White, who runs Web3 is Going Just Great, gave a 15-minute presentation at Web Summit 2022 on exactly that topic — you should watch it (or read the transcript).
Here’s a small snippet:

There will be a web3. The web has been evolving ever since its inception, and there is no doubt in my mind that we are overdue for a fundamental shift. Will it be blockchains and crypto? Venture capitalists and blockchain startup founders really hope that you think so.

I hope that the rest of us will continue working towards utopian goals like the ones I mentioned earlier—the ones that many people who are working in web3 and on web3 projects share—without necessarily being shackled to a technology that holds little promise for the web.

The situation is still developing, and we’ll have more information as things become clearer, but here’s how it stands. Yesterday morning FTX founder Sam Bankman-Fried tweeted, “FTX is fine.”

Today it’s being acquired by Binance to help resolve a liquidity crunch after investors had trouble making withdrawals.

“Since the end of last year, I haven’t been living in South Korea, so it wouldn’t be accurate to say ‘returning to South Korea’” to face the music, the noted crypto villain tells Laura Shin.

He says he hasn’t seen a copy of the warrant for his arrest. He still won’t say where he is (for “personal security” reasons), and, of the charges against him, says, “we are a little bit disappointed in the way that prosecutors are attempting to create new regulation through criminal enforcement proceedings.”

I haven’t seen it yet, but The Atlantic’s Charlie Warzel came away thoroughly unimpressed. It’s basically an internal marketing video masquerading as a documentary:

Most of what we see of our billionaire protagonist is a series of shots as he works (often alone) from his various homes and offices, or gets into and out of chauffeured cars and private jets.

It’s hard to make crypto boring! But that’s what Coin does, it appears — and maybe even what it wanted to do.

South Korean authorities issued a warrant for Kwon’s arrest after the fall of his company’s Terra stablecoin wiped out $60 billion in funds. Kwon was initially thought to be somewhere in Singapore, but now local police can’t find him. On Twitter, Kwon maintains that he’s not running from the police and says he’s willing to cooperate.

I am not “on the run” or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide.

South Korean prosecutors aren’t buying it and said in response that Kwon is “obviously on the run.”