Sam Bankman-Fried must not be mistaken for the economist Milton Friedman. Unfortunately, Sam did mistake himself for an economist. And he has to pay a heavy prize for that.
A man who was worth $21 billion at his peak, Sam is no longer a billionaire. In fact, he is only worth $991.5 million. So he will now no longer be in the Forbes list of billionaires even though he could still afford to pick up a small stake in Forbes. His investors and customers on the other hand are struggling to put together enough to buy the latest edition of Forbes magazine.
It is believed people with an OCD of rounded numbers have been sticking pins into voodoo dolls of Sam Bankman-Fried along with his investors. I am tempted to go all Pulp Fiction and say: “How did we get to this point?” and then start from the end of this story going into a flashback like the opening scene of Sunset Boulevard.
But you see the crypto world is as volatile as the temperament of a fufaji at an Indian wedding. The valuations change quicker than the fortunes of the Indian and Pakistani cricket teams in this T20 world cup. At the time of going to press, there is equal uncertainty on how both the T20 World cup final and the story of FTX will play out.
Last seen, FTX has filed for bankruptcy. The Pakistani cricket team on the other hand is awaiting the result of an even more exciting match between Imran Khan and the Pakistani Army back home.
To be fair, FTX has filed for Chapter 11 bankruptcy. But the way things are exploding in biblical proportions, it might well be a chapter from the Bible. One only hopes Sam was not a fan of Revelations.
Now the reason FTX was in trouble was not because it spent millions of dollars on Superbowl ads and naming stadiums and hiring fancy celebrities like Bill Clinton and Tom Brady because surely history does not repeat itself and neither does Tyco, Hometrade and Sahara.
The unravelling happened when crypto outlet Coindesk announced that the trading firm Alameda research’s finances were heavily dependent on the value of FTX’s token FTT. And Alameda research is owned by FTX founder Sam. And FTT’s value in turn was heavily dependent on purchases from FTX, the token’s largest buyer. And these purchases were done using customer’s funds. Thus it became a twist on that old expression “Ulta Chor Kotwal ko khareede”.
Then Binance founder Zhao tweeted it would liquidate its FTT holdings due to concerns “which we cannot specify”. A lot like our government’s response to the SC on demonetization. This caused a crisis at FTX and it said “Help Binance, buy me. Tumhare toh naam mein bi hai”
Binance wanted to buy FTX (it’s direct competitor), but as soon as the due diligence began, they said “our rival is beyond help. Like K.L. Rahul’s batting average in crunch matches”. And then Binance quoted Nsync singing “Bye Bye Bye” and walked away from the deal. This is similar to Sagar Vadapav cutting ties with Rohit Sharma after India got knocked out from WC22. After this, Sam Bankman-Fried became very sad. He used $9.915 million of his $991.5 million to hire Justin Timberlake to stand outside Binance CEO Zhao’s house and sing “What goes around, comes around”.
Okay, so the last line was a joke. But as loyal readers of #Funnycontrol, may I interest you in some LOLCoin?
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