News·4 min read

Daily Skimm: FTX, Biden, and Joni Mitchell

Sam Bankman-Fried, CEO of FTX US Derivatives, testifies during the House Agriculture Committee hearing titled Changing Market Roles:
November 14, 2022

What the FTX

The Story

The crypto world is experiencing a reckoning.

What is going on?

This is about FTX and its founder, Sam Bankman-Fried. In 2017, the then-25-year-old financial trader founded Alameda Research, a hedge fund dealing in crypto. Two years later, he set up FTX, an exchange platform that anyone could use to trade crypto. FTX (short for Futures Exchange) became the world’s second largest crypto exchange. And last year, SBF (as he’s known) was valued at up to $30 billion, with profiles hailing him as the next Warren Buffett. All that, thanks to Alameda and FTX — two separate companies…at least they were supposed to be.

What happened?

On Nov 2, a story broke that Alameda — at this point run by SBF’s on-again, off-again girlfriend — was financially dependent on a coin affiliated with FTX. That led to concern for the financial health of both companies, and a selloff of the coin. Think: an estimated $6 billion worth of withdrawal requests in three days. But FTX didn’t have the funds to give people back their investments. Binance — a rival crypto exchange — agreed to buy out FTX…but then backed out the next day. All of this came out amid reports that FTX was being investigated by the feds. So on Friday — without a lifeline — FTX filed for bankruptcy. Oh, and then it was allegedly hacked.

Why does that sound like…

Chaos? Because it is. FTX’s turmoil has sent crypto prices spiraling, with Bitcoin and Ethereum dropping more than 20%. Some are calling it the worst crisis for the crypto world since the idea of digital currency took hold in the early 2010s. Many are comparing FTX to Lehman Brothers or Enron. Meanwhile, the SEC, Justice Dept, and Bahamian police have launched investigations. That could include allegations that SBF improperly transferred as much as $10 billion in customer funds to prop up Alameda, a good chunk of which seems to have disappeared. As for SBF, he says that he “fucked up.” It comes as 94% of his net worth is now gone — probably ending his run as the Democratic Party’s second-largest donor.


Crypto has never been a safe bet. But a key selling point has been that no matter how much it’s worth, the currency is secure and traceable. Now, after months of tough news for crypto, some are wondering whether the fallout from FTX can be contained...or whether it will keep dragging the entire crypto industry down with it.


Splitting the Wave 

It’s official: Democrats are keeping the Senate. Over the weekend, Nevada and Arizona counted enough of their votes to guarantee Dems 50 seats. For tipping it over the edge, Dems can thank Sens. Mark Kelly (AZ) and Catherine Cortez Masto (NV). But Americans still have Georgia on their minds: next month’s runoff will determine if Dems have 51 seats or just 50 — and whether they’ll need to keep VP Kamala Harris on speed dial to step in as tie-breaker. 

Meanwhile, the House. 20 races still haven't been called. Many are considered battleground races but Republicans are still expected to take the House majority. Results could take days or longer. In the meantime, the GOP and analysts are doing some soul-searching over how the predicted ‘red wave’ failed to pan out. The leading hypotheses: election deniers may not be the best at winning elections. And don’t underestimate abortion as a voting issue.

And Also...This

Who’s saying ‘allow us to re-introduce ourselves’...

President Biden and Chinese President Xi Jinping. Today, the world leaders are meeting face to face for the first time since Biden took office. The meeting — taking place on the sidelines of the G20 summit — comes amid heightened US-China tensions, particularly over Taiwan. That includes China's flyovers, House Speaker Nancy Pelosi’s (D-CA) visit, and Biden threatening a military response in the event of any “unprecedented attack.” Not to mention: allegations of unfair economic practices and human rights violations. All this against the backdrop of Xi kicking off an unprecedented third term, more missile launches from North Korea, and China’s support for Russia. It’s unclear what will come out of the attempt to hit ‘do over’ on relations...but expectations are low.

What can‘t be forgiven or forgotten just yet…

Student loans. Last week, the Biden admin stopped accepting student debt relief program applications. The reversal comes after a federal judge in Texas struck down the plan, calling it “unconstitutional” and saying that the US isn't ruled by an “all-powerful executive with a pen and a phone.” The Department of Education is appealing the decision. And is saying ‘hold tight’ to the 26 million borrowers whose payments start back up when the clock strikes 12 on New Year’s Eve. In the meantime, the dept isn’t accepting applications through its website.

Where people are mourning...

Turkey. Yesterday, a bomb exploded in central Istanbul, killing six people and injuring dozens more. It’s believed to be the deadliest attack in the country in over five years. Authorities say they’ve arrested a suspect — and have accused Kurdish militants of responsibility. No one has claimed responsibility. The attack has some concerned there could be more incidents ahead of Turkey's elections in 2023.

What people are talking about…

The University of Virginia. Late Sunday night, three people were fatally shot on the school’s campus and two others were injured. Police are searching for the suspect — who has been identified as a student and is still at large. Classes have been canceled today.

While NBC knew Dave Chappelle would be controversial…

Can’t say we expected it from KFC.

Who’s been on both sides and is back for more…

Joni Mitchell.

Live Smarter

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