FTX: The BIGGEST Crypto FRAUD Ever (Worse Than You Think) — Full Documentary
The FTX collapse is explained in this full FTX documentary that chronicles the rise and fall of Sam Bankman-Fried and FTX. FTX has plunged the crypto world into turmoil and ruined SBF overnight as his company and multi-billion dollar fortune evaporated in days. Sam Bankman-Fried is no victim though as it has quickly become clear that the entire operation he was running was filled with fraud, negligence, terrible risk management, and general degeneracy. This FTX collapse explained video will chronicle the FTX rise, collapse, bankruptcy, and scandal in full.
In this FTX Documentary, we'll look at how Sam Bankman-Fried was able to create a multi-billion dollar crypto empire in FTX that was built on lies and deception and how FTX collapsed in a mere matter of days as SBF lost 94% of his fortune in days. This is the story of the FTX collapse and scandal explained.
After working on Wall Street in a hedge fund, Sam would found the crypto hedge fund Alameda Research in 2017. Alameda employed a quantitative trading philosophy to its trades and used mathematical models and data to inform decisions. A big focus of the firm's trades would be buying Bitcoin and other cryptocurrencies in one part of the world and selling them in another to profit off of price differences. Alameda also did not shy away from using leverage and borrowed money for its trades so it could chase bigger gains.
But this was not enough for Sam. He wanted to make more money and he was unimpressed with the existing crypto exchanges. He thought many of them they were glitchy and unsafe. To address this platform problem, Sam Bankman Fried had the idea to create an exchange of his own and would launch the cryptocurrency exchange FTX in 2019.
This cryptocurrency exchange also gave Sam Bankman-Fried and FTX the opportunity to create a specific cryptocurrency token for use on their platform. FTX would take this idea and run with it by creating its own FTT tokens. The idea behind these tokens was that if a customer used the tokens to buy and sell cryptocurrencies, FTX would offer a trading discount on these transactions. This incentivized people to own the tokens and generated another source of revenue for the company.
After a prolonged crypto bear market, FTX's FTT tokens began to collapse when CoinDesk reported that Alameda's balance sheet was full of FTT tokens. Alameda Research had approximately $14.6 billion worth of assets, but $3.66 billion of that was unblocked FTT tokens and $2.16 billion of that was FTT tokens being used as collateral. The fact that so much of Alameda's balance sheet was a made up asset that its sister company FTX had made out of thin air spooked the markets since it became clear that the assets on Alameda's balance sheet were not as strong as they seemed on paper since so much of them were artificially created and controlled.
This caused a run on the bank and liquidity crisis as investors scrambled to exit their FTT positions which created significant downward pressure on the token. This selling pressure was magnified in a major way as Changpeng Zhao, founder and head of Binance the largest cryptocurrency exchange, tweeted on November 6th that Binance would be liquidating the majority of their position in FTT due to the revelation. With blood in the water, investors were trying to take their money out of FTX's platform as quickly as possible as the relationship between Alameda Research and FTX was too close for comfort. Sam tried to negotiate a rescue buyout from his rival Binance. All of this caused an FTT crash and FTT collapse which destroyed the token's value.
It then came out from the Wall Street Journal that funds from FTX customer accounts had been funneled into Alameda Research to fund risky trades. Because of this, Alameda actually owed FTX $10 billion that had been extended as a loan. Moreover, Sam Bankman-Fried had engaged in other sketchy and fraudulent behavior. Investors were unwilling to invest more money into FTX because of the fraud allegations against Sam Bankman-Fried. This inability to find any money to return customer deposits ultimately led to FTX's bankruptcy and collapse. Since then, many have said that FTX may be a bigger and worse fraud than Enron.
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Timestamps:
0:00 Intro
3:44 The Rise of Sam Bankman-Fried and FTX
7:08 TerraUSD Collapses and FTX Bails Out Crypto Companies
10:03 FTX's FTT Token Collapses
15:13 FTX Seeks a Bailout from Binance
20:46 FTX Declares Bankruptcy and Fraud Allegations Emerge
Disclaimer: Opinions expressed in this video are my personal opinion and are for information and entertainment purposes only. It is not intended to be investment advice and you are responsible for doing research and making your own investment decisions. Seek a licensed professional for investment advice.
#ftx #cryptonews #sambankmanfried
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