The Worst Crypto Stories of 2022
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The Worst Crypto Stories of 2022

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From massive hacks and a stablecoin collapse to bankrupt investment platforms and the criminal case against FTX's Sam Bankman-Fried, crypto's self-inflicted wounds were the worst.

The Worst Crypto Stories of 2022

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If there was ever an annus horribilis in crypto, 2022 was it.

A crushing bear market made worse by three big disasters that arguably helped chop as much as $25,000 off the price of Bitcoin beyond what it would have lost led to a year in which more than half of all Bitcoin owners are in the red.

Beyond that, the industry's name is mud in Congress just as a big regulatory push is beginning, crypto hacks not only soared but affected huge numbers of victims, and millions of investors have been crushed by poorly managed lending projects and what seems to be criminal mismanagement if not outright theft by what was the second-largest cryptocurrency exchange in the world.

Here's a countdown of the 22 worst stories in crypto this year, with fingers crossed for 2023.

22. Virgil Griffith Goes to Jail

This one is as much sad as bad, with now former Ethereum developer Virgil Griffith's trip to a North Korean crypto conference three years earlier ending with a 63-month jail term on April 12. Griffith claimed he'd visited — after being refused State Department permission — in violation of sanctions as a sort of peace gesture and only spoke of basic crypto concepts easily available online (and because of Obsessive-Compulsive Personality Disorder and Narcissistic Personality Disorder, his lawyer said.)

Citing an FBI agent present at the conference, the U.S. Justice Department said he gave presentations that include using cryptocurrencies to avoid sanctions and launder money, as well as use smart contracts in nuclear weapons talks.

21. The (Brief) Return of Michael Patryn

Crypto has a long memory. One of those it remembered is Michael Patryn, who had in his past spent 18 months in federal prison for credit card fraud, burglary, grand larceny and computer fraud. More to the point, he'd also been a co-founder of QuadrigaCX, the Canadian exchange that failed after the (reported) death of its CEO, Gerald Cotten.

While Patryn had departed years earlier, and was never accused of any wrongdoing in that case, customers were first told that Cotten died without leaving anyone the passwords to the exchange's cold wallets with their $190 million, and then that they were empty and the exchange had become a Ponzi after his bad bets on the market.

Still, it did not go over well when someone revealed that Patryn was 0xSifu, treasury manager of the Wonderland DeFi protocol. Co-founder Daniele Sestagalli said he knew of Patryn's past — but had believed in giving second chances. The Wonderland community did not, and Patryn was asked to step down. At that point the damage to a once-strong community was enough that Sestagalli held a vote on whether to move ahead or shut down and return members' funds. While "move ahead" was winning 55% to 45%, he said that showed the community was too deeply split and closed Wonderland down.

20. Tesla Sells 75% of Its Bitcoin

Back before he bought Twitter, Elon Musk had in years past shown he could move the Bitcoin market with a tweet, not just his memecoin favorite Dogecoin. As the company's $1.5 billion Bitcoin buy had been a huge vote of confidence by a mainstream corporation in good times, dumping it for $936 million could be seen as a huge vote of no confidence as crypto winter deepened. It was heavily criticized as such by another big corporate Bitcoin buy, MicroStrategy's Michael Saylor. But, Musk said it was just the need for liquidity as COVID shutdowns hit China.

19. Celebrity Endorsers Flame Out

Celebrities have not had good luck endorsing crypto. From quarterback Tom Brady to actor Larry David, there's been a backlash since crypto winter hit — which got a lot worse as the exchange many had endorsed was free-spending FTX. Sam Bankman-Fried allegedly stole billions from his customers while dishing out big paychecks to big names and bigger stadiums.
Many, like tennis star Naomi Osaka, were paid in price-collapsed crypto, but the worst hit has likely been taken by Hall of Fame shoo-in Brady, who flamethrower-wielding endorsements appeared to have been paid for with a now-valueless equity stake.
Adding insult to injury, many of them are being investigated by Texas' securities regulator for failing to reveal the amount they were paid — although in the spring a self-styled "on-chain sleuth" revealed a list that he claimed detailed payments — which is required by the Securities Act. That just brought Kim Kardashian a $1 million fine by the Securities and Exchange Commission (SEC), and others seem likely to follow. A Federal Trade Commission investigation is in the works, and, of course, there's an investor lawsuit as well.

18. Green Backlash

While it was beaten back in the EU's Markets in Cryptoassets (MiCA) bill, a push by Green lawmakers to ban Bitcoin outright because of the country-sized environmental cost isn't over. Not only have they promised to pursue it, the European Central Bank (ECB) said BTC is on the "road to irrelevance." and mining bans are growing — including one in New York state that finally passed — and even a White House report has brought it up. And with the Ethereum Merge to Proof-of-Stake having successfully eliminated ETH's environment impact, it's harder to say the same can't be done for Bitcoin.
On the private side, both Wikipedia and Firefox developer Mozilla were forced to stop accepting crypto donations after a backlash, Greenpeace has launched an anti-Bitcoin campaign, and the World Wildlife Federation (WWF) yanked an NFT sale after complaints that while it was on the PoS Polygon blockchain, that was Layer 2 for still-dirty pre-Merge Ethereum.

17. NFT Thefts Grow

The theft of NFT collectibles was inevitable as their use and value grew, and didn't stop when it plummeted with the rest of the crypto market. By August thefts had passed the $100 million mark, Discord accounts and celebrity Twitter hacks were used in scams and an ex-OpenSea NFT marketplace executive had been charged with insider trading. The most infuriating, in some ways, was the theft of actor Seth Green's Bored Ape Yacht Club (BAYC) profile picture (PFP) collectable. Intended for use in a TV show he was producing, Green had to buy back his own stolen property — for more than $300,000. That's in addition to the costly selling errors and just plain tastelessness of some collections.

16. Ransomware Payments Growing

In February, blockchain intelligence firm Chainalysis said that $692 million had been extorted by ransomware gangs — that it knew of — nearly doubling the 2020 total. And it had called 2020 the "Year of Ransomware." The average payment grew from $88,000 to $118,000 as well. Chainalysis said:
"By cracking down on the small number of services that facilitate this money laundering activity, law enforcement can significantly reduce attackers' options for cashing out, reducing the financial incentive to carry out ransomware attacks and hampering ransomware organizations' ability to operate."

15. El Salvador's Awful Results

Many in the crypto community see El Salvador's experiment with Bitcoin as legal tender as the future of money. But on the ground, the year-old experiment has been a failure so far. The paper losses on his national Bitcoin purchases are at least $65 million of the $105 million spent — although the country won't officially reveal the size of its Bitcoin holdings so President Bukele's tweets have been used. More than three-quarters of Salvadorans want the president to reverse the legal tender policy, less than 2% of remittances were sent using BTC despite transaction fee savings, and day-to-day use has been minimal at best.
Beyond that, the country's much-ballyhooed Bitcoin bond has been on hold due to, the government said, broader financial market turmoil. But its own sovereign bonds have been hammered by the International Monetary Fund's (IMF) unwillingness to make a loan needed to prevent a default in January — due in large part to the legal Bitcoin experiment — and Bitcoin City is still nowhere to be found. But hugely popular President Nayib Bukele has been unwavering. Only one country has followed suit: Tiny, civil war-torn Central African Republic.

14. Coinbase's Woes

When it became the first pure crypto firm to hold a direct stock listing on Nasdaq, crypto exchange Coinbase became a de facto bellwether for the industry. The company began the year planning to hire 2,000 more employees. By June, it had cut 1,100 jobs — 18% of the workforce — and outraged new hires by rescinding accepted job offers (which can't help future recruiting). Employee morale suffered. While there were some bright spots, there were also misses like its minimally used NFT marketplace. CEO Brian Armstrong said the company had grown too fast and investors agreed, hammering the share price — it's down 85% as the year draws to a close.

13. Layoffs All Around

Coinbase wasn't the only crypto company shedding employees. The Crypto.com and Gemini exchanges used cut jobs, as did Kraken, Blockchain.com, Bybit and BitMEX among others. Brazil's 2TM and Bitso, Argentina's Buenbit, India's WazirX exchanges all had big rounds. As did metaverse-focused Meta and Elon Musk's Twitter.

12. U.S. Blows Away Tornado Cash Mixer

Crypto mixing services and privacy coins are arguably law enforcement's top target in all of crypto, but none was hit as hard as Tornado Cash, a mixing service that was slapped with U.S. sanctions over North Korean hackers' use of the service after the $625 million Ronin Bridge and $100 million Horizon Bridge hacks. As it is a fully operational DAO — no developer master keys left — it is pure code, which made the sanctions precedent-setting as code has generally been treated as writing, which is Constitutionally protected speech. That was enough to bring the Electronic Freedom Foundation (EFF) into the legal fray alongside Coin Center, and Coinbase said it would fund a legal challenge, as crypto Twitter seethed.
A troll sent small amounts of ETH from Tornado Cash to a number of celebrities, who had no way technically to not accept them — addresses cannot reject crypto transactions — potentially violating sanctions. While any violation was dubious at best, it was enough for the Treasury Department to announce it wouldn't prosecute Logan Paul, Jimmy Fallon and others.
Far more frightening from a decentralized finance prospective — or at least a DeFi developer prospective — was the near-simultaneous arrest of Tornado Cash developer Alexey Pertsev in the Netherlands, where authorities said code can be criminal, and have held Pertsev in isolation. Pertsev's involvement was long over, but he's being charged with facilitating money laundering.

11. Requiem for Facebook's Stablecoin

At the beginning of the year, news started to break that the Diem Association was considering selling the intellectual property it had developed for the stablecoin Libra, later renamed Diem in an unsuccessful attempt to escape its damaged brand, and shut down. Created by Facebook in 2019 (as Meta was known then) was attacked by politicians and central bankers around the world as an attempt by CEO Mark Zuckerberg to cut out national currencies.
Partners like Visa, Mastercard and PayPal had long since departed, and it was growing more and more clear that the only lasting impact Diem would have was to be the growing trend to launch or at least seriously investigate central bank digital currencies (CBDC) by some 100 countries. India has been pretty clear that its digital rupee project is heavily influenced by the need to fight off stablecoin and cryptocurrency payments, and the European Central Bank has been aggressively supporting a digital euro in part because of that.
The IP was purchased by crypto bank Silvergate, and the Novi digital wallet that Facebook created for Libra/Diem — and that Meta tried to remake for the Paxos stablecoin — was shut down too, over the summer.

10. India, Crypto and the Digital Rupee

India's relationship with crypto has been mixed: Many people embraced it, and the government very nearly banned it. While that was looking unlikely by the beginning of the year, a 30% tax on trading profits — among the highest in the world — was actually embraced as a good sign. WazirX exchange founder Nischal Shetty tweeted:
"Hope to see a reduction of crypto ban fear in India. Lot to unpack here but overall this is a very positive step forward for the crypto ecosystem in India."
However, once it came into effect, it treated crypto investments like gambling, meaning losses could not be used to offset gains, and trading volume plummeted. And large Indian exchanges WazirX and CoinSwitch Kuber, as well as Coinbase, suspended service in April after the crypto exchanges were booted from India's real-time payment system United Payments Interface (UPI), which is both essential to crypto exchanges' ability to process payments and run by the Reserve Bank of India (RBI), the country's loudest voice for an outright crypto ban.
Meanwhile, India's government has been rolling out a CBDC in record time. In late November, the RBI rolled out plans for a 400,000-person digital rupee test with some of its largest banks. The goal is an active digital rupee by the end of 2023.

9. Elon Musk buys Twitter

"How do you make a small fortune in social media? Start out with a large one."
–Elon Musk, Nov. 17, Twitter

That sums up pretty well how the Tesla and SpaceX CEO's purchase of Twitter is going.

After buying a 9.2% stake and demanding then refusing a board seat, he offered to purchase Twitter for so much money that the board not only said yes, it wouldn't let him back out of the deal. At which point Musk went on a legal and PR offensive, accusing Twitter of having far more spam bots and fake accounts than it claimed — which would, he said, violate the purchase agreement (and get him out of it). Among the investors was Binance, which owns CoinMarketCap. Founder Jack Dorsey was also a Musk buyout supporter.
That's not the only crypto connection. For one thing, Musk-favorite Dogecoin spiked (and fell) several times as its prospects of becoming a Twitter payments token rose and fell. But there's a broader question about what crypto would do without Twitter. In a recent CoinMarketCap panel, Bitcoin Magazine editor Pete Rizzo, who was founding editor of news site CoinDesk in 2013, said:
"When you're talking about delivering news and information […] to the cryptoverse you have to be on Twitter. That's kind of where everything is… Twitter is just so large and so dominant now. I like to say, you know, Twitter defines the reality of crypto. That's how big it is for our ecosystem."
Musk has also talked up Twitter as the core of a WeChat-style "everything app" that would include payments.
After walking in with a sink, Musk quickly fired the top executives and almost as promptly fired half the staff — so fast, in fact, that there was no way he'd been able to carefully pick and choose the best and most vital people to keep. Which led to Twitter having to try and woo some key people back. Just as he was demanding the staff sign a pledge to, in essence, give up their personal lives, which led to another wave of exits (including the head of crypto), as did a (semi) mandatory return to the office.
All that led to a number of threats by a variety of regulators and politicians over allowing hate speech and incitement to violence back on, both because of his claim to be a "free speech absolutist" and because the staff to do it was reportedly decimated. Donald Trump was allowed back on and hasn't come, while Kanye West was promptly rebanned for posting a swastika.
Which all led to a swath of major brands like Volkswagen and Pfizer pulling ads over concerns about content — which led to threats of a name-and-shame campaign and attack on Apple, both for pulling ads and threatening to boot the Twitter app off the App Store.

8. SEC Targets Crypto Lenders' Earn Programs

Coinbase was still raging about the SEC threatening to sue it in 2021 over its planned and canceled Coinbase Earn program which was to offer extraordinarily high interest rates — 20% or more in some cases — to investors who put up their crypto to be loaned out when the agency announced a $100 million settlement with BlockFi for doing just that.
The SEC and a number of state securities regulators, as well as federal agencies, were focused on earn/lending programs even before crypto lenders like Celsius and Voyager Digital went belly up due to bad loans given without collateral, leaving millions of customers facing huge losses. Which didn't stop a top House Republican, Rep. Tom Emmer, from blaming SEC Chairman Gary Gensler for their collapse (along with FTX). The agency doubled the size of its crypto investigative unit in May.
As for the future of crypto earn programs, lender Nexo — which appears to have gotten through the run of bankruptcies unscathed — announced its withdrawal from the U.S., citing regulators unwilling to talk productively. BlockFi got a double whammy as it was rescued from bankruptcy by FTX, and promptly went back into it when the No. 2 crypto exchange exploded.

7. What's a Security?

The crypto community's widespread belief that most cryptocurrencies are not securities appears to be on thinner ice as the year draws to a close. While the ongoing lawsuit against Ripple for allegedly selling unlicensed securities in the form of the XRP token was the big fight at the beginning of the year, the field of battle is expanding.

Sen. Cynthia Lummis, the Wyoming Republican, said in December that the Merge to a Proof-of-Stake Ethereum 2.0 has probably made it a security — a comment SEC Chairman Gary Gensler has made.

More broadly, the collapse of crypto lenders and the FTX exchange has members of Congress like Rep. Emmer saying the SEC could and should have prevented it. As for SEC oversight of exchanges, which Gensler has said should all register as broker-dealers, Gensler said on Jan. 19, 2022:
"I've asked staff to look at every way to get these platforms inside the investor protection remit. If the trading platforms don't come into the regulated space, it'd be another year of the public being vulnerable."

Yup.

6. Cross-Chain Bridges Falling Down

DeFi has been by far the most-hacked segment of crypto in 2022, with at least $3.2 billion stolen, and the vast majority of that's down to cross-chain bridges.
The numbers are staggering: Axie Infinity's Ronin Bridge was hit for $625 million by North Korean hackers — making it the biggest crypto theft ever based on the value of the stolen crypto at the time. Binance Bridge lost $586 million (although Binance managed to freeze the BNB Chain before they got away with more than $100 million.)
Wormhole Bridge lost $325 million. Nomad was robbed of $190 million, Beanstalk Farms for more than $180 million and Wintermute $160 million. Harmony's Horizon Bridge was also struck by North Koreans, who made off with $100 million. Qubit Finance's QBridge was the first bit bridge heist of the year, losing $80 million at the end of January.

And that's just the big ones.

One common flaw in many of these cases is that the bridges were built hastily and without proper testing, or with too little attention to security — too few validators was the cause in the Ronin and Horizon bridges, which allowed hackers to steal passwords — and Nomad's was so bad that more than three dozen people did a "me too" free-for-all by copy-pasting the original thief's attack
While most bridges involve thousands or tens of thousands of users being robbed, some got lucky. Wormhole parent Jump Trading replaced the nearly third of a billion dollars worth of ETH stolen and harmony deployed the project's treasury to reimburse victims.

Hundreds of smaller thefts happened as well. Some projects were able to reimburse the tens of thousands of users who lost locked funds. Others were not. All were ETH bridges.

Bridge platforms make it easier to make payments and transactions across different blockchains by allowing users to deposit one cryptocurrency and withdraw (really mint) a wrapped version of another. When the user is finished, they return the wrapped tokens and withdraw their locked crypto. Which is cheaper and faster than selling one to buy another on an exchange and then reversing the process.

As these are almost all DeFi platforms, it also means that the locked tokens are — must be — kept in vulnerable hot wallets. And they have two vectors of attack, as both the deposit and return sides can be hit.

5. The Self-Inflicted Crypto Winter

It's fairly reasonable to argue that a crypto winter was inevitable in 2022. Aside from crypto's history of what goes up must come down, the broader economy made it inevitable — at least, once it came clear that Bitcoin was not a store of value and inflation hedge that would keep its value in bad times.

That took the bellwether Bitcoin down from the all-time high of almost $69,000 to around $40,000. Then three self-inflicted wounds followed. The collapse of the poorly designed Terra/LUNA ecosystem not only caused $48 billion in token holder's value to go up in smoke, it caused BTC to drop to around $28,000 in the space of seven days in May as confidence in crypto broadly was shaken.
Eleven days in June saw that collapse again to under $19,000 as crypto lender Celsius went under, followed by BlockFi, Voyager Digital and others that saw huge loans lost when crypto hedge fund Three Arrows Capital (3AC) collapsed as a result of Terra's collapse.

Coinbase would later say:

"Many of these firms were overleveraged with short-term liabilities mismatched against longer duration illiquid assets … We believe these market participants were caught up in the frenzy of a crypto bull market and forgot the basics of risk management. Unhedged bets, huge investments in the Terra ecosystem, and massive leverage provided to and deployed by 3AC meant that risk was too high and too concentrated."
The third was the collapse of the FTX cryptocurrency exchange, when it turned out that jailed CEO Sam Bankman-Fried had allegedly been looting the second-largest exchange's customers to backstop his crypto trading firm Alameda Research, which lost at least $8 billion of the $10 billion illicitly transferred.
Crime aside, it showed that one of the highest-profile crypto executives was not just an alleged conman and fraudster, but a fairly sloppy one, as the Enron bankruptcy veteran brought in to replace Bankman-Fried and handle the bankruptcy said he'd never seen worse. John Ray III told the told Delaware Bankruptcy Court in a Nov. 17 filing:
"From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented."

Even though the drop was smaller, from about $21,000 to $16,000, it did more damage to crypto's reputation as a mature industry than anything else.

The effect is fairly clear: the number of Bitcoin millionaires has fallen 76%, according to BitInfoCharts.

4. LUNA Fails

The UST stablecoin had shot from a market capitalization of $250 million at the beginning of 2021 to $40 billion before crypto winter took it to about $30 billion on May 4 — still enough to be the No. 3 stablecoin by a fair margin. But the algorithmic stablecoin, which used an incentivized arbitrage mechanism with a free-floating cryptocurrency, LUNA, to maintain its peg — as opposed to a dollar reserve like USDC and USDT.

Then its dollar peg began to slide, then crumble as traders panicked. By May 12 its market cap was back near $250 million. LUNA was $86 on May 4. By May 12, it was worth less than 17 cents.
In April, the Luna Foundation had been accumulating billions of dollars in Bitcoin to backstop UST's dollar peg. It wasn't enough. Founder Do Kwon, who had a reputation for aggressiveness if not arrogance, came up with several revival plans, but nothing came of them.
A lot of big money had bet on Terra/LUNA. For one, crypto asset management firm Galaxy Digital's CEO Mike Novogratz got a large LUNA tattoo on his right shoulder. He later said:
"My tattoo will be a constant reminder that venture investing requires humility."
With a great many South Korean investors, Kwon and his Terraform Labs came in for police questioning, vigorously denied claims of embezzlement and cashing out billions of dollars followed, as did an arrest warrant and Interpol Red Notice. Whether Kwon is on the run is debatable (he says) but threats against him are not, and possibly locations are Dubai and Serbia.

3. The Big Hedge Fund That Couldn't

Terra/LUNA's collapse was bad enough to make algorithmic stablecoins a political bogeyman on its own, but a major crypto hedge fund, Three Arrows Capital, had made huge and highly risky bets on it. Along with a pair of other missteps, they were big enough to make it insolvent.
Three Arrows Capital, or 3AC, was a crypto hedge fund founded in 2012 by Zhu Su and Kyle Davies. With as much as $18 billion in assets under management (AUM), it had venture investments — Aave, KeeperDAO, Axie Infinity — and held tokens, but it had also bet very, very big on LUNA. Zhu said:
"What we failed to realize was that Luna was capable of falling to effective zero in a matter of days and that this would catalyze a credit squeeze across the industry that would put significant pressure on all of our illiquid positions."
The second was Grayscale Bitcoin Trust, a vehicle for investing in Bitcoin without actually holding the cryptocurrency. Popular when there were few other choices for institutional investors, it went from a large premium (10%-30%) over the value of the Bitcoin it held to a large and growing discount (25%-30% when 3AC started buckling to almost 50% now) after other alternatives like ETFs became available in early 2021.
The third was stETH, a liquid staking derivative issued by Lido, the largest pre-Merge Ethereum 2.0 staking player. In some ways a "stablecoin" pegged to and backed by ETH, stETH depegged.
Together, the three were fatal. The firm is in liquidation, and owes $3 billion to creditors. Its founders and liquidators are in a war of words — with the latter calling Zhu and Davies unhelpful and saying they are in "jurisdictions known for difficulties in enforcing foreign court orders." An interesting nugget is the $30 million liquidators hope to get for the firm's Doge-named superyacht "Much Wow" that had been purchased not long before everything went south.

2. Celsius Overheats

On June 13, one of the largest crypto lenders, three-million-customer Celsius Network, suspended withdrawals citing "extreme market conditions" — a phrase that would become widely used in that corner of crypto.

Celsius was aggressive, one of the crypto lenders offering returns of more than 18% when savings accounts were offering well under 1%. SEC Chairman Gary Gensler warned:

"Sometimes, if it seems too good to be true, it just may well be too good to be true in terms of those websites that talk about 7% or 17% returns."
CEO Alex Mashinsky talked a good game about restarting withdrawals, but people were getting desperate, one would-be home-buyer noting that they were "crying and praying to God that I will be able to get that money out. It took four years and me working 100 hours every week to save. Can't sleep."
But bad news kept coming. An ex-employee sued the firm, claiming it was using customer funds to "manipulate cryptoasset markets" without introducing "basic accounting controls." Another soon called it sloppy and mismanaged in an interview.
With the firm $1.2 billion in the hole to 300,000 customers, bankruptcy finally came a month later on July 13, when Mashinsky said:
"I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company."
By that time Voyager Digital was already in bankruptcy thanks to uncollateralized loans to 3AC, with BlockFi saved (for the moment) from that fate by Sam Bankman-Fried's FTX. And more were falling due to 3AC loans. Mashinsky resigned in late September, calling himself a "distraction."
Revelations a few days later that he and two other top executives had withdrawn $56 million in the weeks before the bankruptcy seem to make that fairly likely.

1. Sam Bankman-Fried and the Collapse of FTX

In a year that didn't seem like it could get much worse, along came Sam Bankman-Fried, CEO of the second-largest global cryptocurrency exchange, FTX and his private trading firm Alameda Research.

The collapse of FTX, in just nine days in November, hit the industry harder than anything — and arguably everything — that happened in 2022. FTX, it was revealed, had sent $10 billion of its customers' funds to prop up Alameda — with the right to do so. About $8 billion was missing, apparently lost in trading, although the question of misappropriated funds remains.

The two companies, supposedly separate, were effectively run as one "personal fiefdom."
With one million customers, FTX was a disaster unmatched not just in size but in prestige. Bankman-Fried had spent the year making himself the face of crypto before the general public with a series of top-line athlete and celebrity endorsements as well as a political push that made him the most frequent crypto CEO on Capitol Hill while he became by far its largest donor. He handed out tens of millions of dollars in campaign contributions and had promised $100 million. While most went to Democrats he recently said he gave just as much to Republicans but did so secretly.

Then a CoinDesk story on Nov. 2 punched a giant hole in the narrative he'd built of himself as crypto's golden boy billionaire.

Alameda was found to have more than $5.8 billion of its $14.6 billion in assets in FTT — an exchange token issued by FTX that gave holders a trading discount. That raised big questions about FTX's financial health. And when Binance said on Nov. 6 it would offload some $580 million in FTT tokens — over several months — due to "recent revelations" it set off the crypto exchange version of a bank run. Customers made $6 billion in withdrawal requests in 72 hours. That proved more than FTX could handle.
FTT tokens shed nearly three quarters of its value by Nov. 8, when Binance CEO Changpeng "CZ" Zhao signed a non-binding agreement to buy FTXbacking out a day later after due diligence showed "way too many issues."
Bankman-Fried began what would become days of apologies for having "f***** up" before a Nov. 11 bankruptcy filing and his resignation. He would claim in a series of increasingly improbable interviews that it was all a mistake, that he had somehow not noticed that billions of dollars were missing, that he'd been lazy with oversight, and that he'd done nothing criminal. Worth $15.6 billion on Monday, Nov. 7, he was worth about $100,000 he claimed in early December, he later told an interviewer.
Around that time of that turnover, the exchange was hacked for almost $500 million hours after the bankruptcy filing, an event Bankman-Fried would later say looked like an inside job (but wasn't him).
Meanwhile, the restructuring expert brought in as new CEO, who had done that job for Enron, said he'd never seen anything as bad as FTX.
The revelations kept coming: Secret backdoors to avoid having transfers from FTX to Alameda discovered by legal and compliance; he'd let Bahamian clients withdraw after the pause; he helped the Bahamian government seize a large chunk of funds after a U.S. bankruptcy judge froze everything; Alameda frontrunning FTX cryptocurrency listings; a $300 million personal loan unaccounted for; recordings of Bankman-Fried trashing regulators and laughing that "the ethics stuff [was] mostly a front;" and an ongoing anti-money-laundering (AML) probe of FTX.
Then came the final collapse: A day before he'd agreed to speak at a House hearing on the subject (but not a Senate hearing), he was arrested in The Bahamas on fraud charges at the request of U.S. prosecutorsupsetting the elected officials holding those hearings now that he'd lawyered up for real.
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