Where's Waldo?

Unpacking the "how we got here" of it all

Gm, everyone. Life comes at you fast in a market meltdown. Sometimes all you can do is send one-letter tweets trying to make sense of it all. Or you can read Coinsider Radar.

Here’s what we’re looking at today: Why were we all clueless? Where in the world is SBF? And what’s happening to FTX advertisers? Let’s dig in.

—Angelina & Vincent

How Come No One Saw This Coming?

Covering the FTX fiasco as it unfolds is no easy feat. It’s been a Real Housewives season of one shocking revelation after another. But instead of predicting what’ll happen next, let’s go back in time to address the elephant in the room:

How come no one saw this coming?

Inside the black box: FTX’s implosion came as a total surprise to both investors and to the company’s own employees—so much so that many workers allegedly kept their life savings in FTX accounts, only to watch them vanish into thin air. Adding insult to financial injury, FTX employees were kept in the dark about their company’s financial situation, an FTX Japan employee told Yahoo Finance. Most of them learned about the company’s bankruptcy filing from Twitter along with the rest of us.

This peek into FTX’s company culture could offer some insight into how things went south:

  • CoinDesk spoke to some of SBF’s (former) employees who all described FTX and Alameda as places “full of conflicts of interest, nepotism, and lack of oversight.”

  • SBF’s inner circle of decision makers was a tight-knit clique of college friends-turned-roommates-turned-execs (whose strategic process was completely opaque to outsiders).

  • Unbeknownst to his employees, SBF had a backdoor in FTX’s book-keeping system that allowed him to alter the exchange’s financial records without alerting others.

But it wasn’t just issues on the inside that got us here…

The FTX disaster caught regulators off guard, too. Lawmakers have been facing accusations that a lack of regulatory clarity in the U.S. is what drove investors to offshore exchanges like FTX, which lack customer protections. As such, expect a ramping up of regulation rhetoric (we’re expecting the SEC to make a move).

Oh, and one more thing? It’s not like nobody saw the collapse coming—Larry David was pretty spot-on. And according to Elon Musk, SBF set off his bullsh*t meter waaay before the crash. But what’s that saying about hindsight…?

—Angelina

Where’s Waldo SBF?

What do Do Kwon and Sam Bankman-Fried have in common? A lot, as it turns out: 1) Both sent crypto markets into freefall with their disastrous flywheel schemes 2) both falsely promised investors that they need not worry and 3) both are missing in action.

Already in the crosshairs of the SEC for potentially violating securities law, SBF might have to swap his Bahamas penthouse for a prison cell if the Justice Department files criminal charges. So is SBF making a run for it?

The rumors suggest as much:

  • On Saturday, FlightRadar24 said that a private jet was flying from the Bahamas to Argentina—allegedly with the ex-FTX CEO on board.

  • $600 million of mysterious outflows left FTX wallets on Friday, just as FTX filed for Chapter 11 bankruptcy and SBF resigned as CEO. Twitter sleuths were quick to call it an inside job c/o SBF.

However: Currently, these speculations are just…speculations. Argentina has an extradition treaty with the U.S., making it an unlikely escape for a wanted CEO. Plus, an anonymous source told Cointelegraph on Sunday that SBF is currently “under supervision” by Bahamian authorities but planning to flee to Dubai.

Big picture: Some of crypto’s biggest names are evading the legal consequences of their actions. If SBF pulls a Do Kwon and goes full international fugitive, it’s not only depriving investors of the justice they deserve—it’s also setting a troubling precedent for the crypto industry.

—Angelina

FTX Advertisers Right Now…

Days after FTX’s insolvency was made known, partners and advertisers began to distance themselves. Case in point:

  • Miami HEAT and Miami-Dade County tore up their 19-year deal with FTX for the naming rights of the city’s arena (the exchange still owes the county $16.5 million).

  • Finance influencers who worked with FTX (like Graham Stephan) have started to issue apologies to fans.

Several other FTX partners have yet to comment, however. This includes a slew of professional athletes who got caught up in FTX (Tom Brady and Steph Curry), plus Major League Baseball (which had a deal with FTX).

Get ready for it: Brands and influencers across the globe are going to become more wary of promoting crypto companies, slowing down the mainstreaming of crypto and digital asset markets in general.

—Vincent

In other news:

  • Visa ends its debit card partnership with FTX.

  • Following NFTs just got easier. Find out why staff from Dapper Labs, OpenSea, Coinbase, and Rarible get their NFT news from NFT Lately: Join the free Newsletter.

  • FTX’s U.S. derivatives arm is still in good shape thanks to regulation, says the CFTC.

  • Bitcoin mining firm Cathedra cut two-thirds of its payroll costs by slashing jobs and salaries.

  • Investors are concerned that Crypto.com could be the next exchange to experience a liquidity crisis. Its CEO says users have nothing to worry about.

And that’s what you need on your crypto radar today. Reply to this email and let us know which crypto companies you think will make it through the current crash. See you Friday!