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The monumental collapse of FTX will go down as one of the biggest corporate scandals of all time. But, at least Sam Bankman-Fried, or SBF, is sorry. On Nov. 22, the disgraced founder of FTX penned a letter to his former employees describing his role in the company\u2019s bankruptcy. \u201cI never intended this to happen,\u201d he wrote. \u201cI did not realize the full extent of the margin position, nor did I realize the magnitude of the risk posed by a hyper-correlated crash.\u201d Get this: SBF still thinks the company can be saved because \u201cthere are billion of dollars of genuine interest from new investors.\u201d Shouldn\u2019t he be preoccupied with trying to avoid jail right now?<\/p>\n
Bitcoin (BTC<\/a>) and the broader crypto market have been reeling in the wake of the scandal. While this has allowed many diamond handed hodlers to accumulate more BTC on the cheap, institutional investors are using this opportunity to short the market. We may finally get that final capitulation to round out the current four-year cycle. <\/p>\n As always, this week\u2019s Crypto Biz newsletter delivers all of the latest high-profile business news from our industry. <\/p>\n SBF\u2019s letter to former FTX employees<\/a> painted the picture of a deeply remorseful founder who managed to squander billions because of excessive margins and poor oversight. He also blamed the \u201crun on the bank\u201d for FTX\u2019s ultimate demise. For those of you keeping track, the bank run that SBF mentioned was triggered by Binance CEO Changpeng Zhao who, on Nov. 6, disclosed on Twitter \u2014 of all places \u2014 that he would be selling $500 million worth of FTX tokens<\/a>. That announcement triggered a tidal wave of redemptions on FTX as users rushed for the exit. Within 48 hours, FTX was shown to be insolvent. <\/p>\n The hole in FTX\u2019s balance sheet is estimated to be worth around $8 billion \u2014 and a huge portion of that is owed to just 50 people<\/a>. New bankruptcy filings in the state of Delaware confirmed this week that FTX\u2019s top 50 creditors are owed a combined $3.1 billion. One individual is owed more than $226 million, while the rest of the top 50 had anywhere between $21 million and $203 million on the failed derivatives exchange<\/a>. So, when can FTX creditors expect to get some of their money back? It could take years or even decades<\/a>, according to insolvency lawyer Stephen Earel. <\/p>\n FTX discloses its top 50 creditors are owed $3.1 billion. <\/p>\n The largest creditor is owed $226 million.<\/p>\n All names were redacted. pic.twitter.com\/JGeddvMB7w<\/a><\/p>\n \u2014 Tom Dunleavy (@dunleavy89) November 20, 2022<\/a><\/p><\/blockquote>\n Believers in Bitcoin as a sound money alternative to the current monetary regime have used the latest market collapse to accumulate more BTC. But, for some institutional investors, the FTX collapse has triggered a new shorting opportunity<\/a>. According to CoinShares, 75% of institutional crypto investments<\/a> last week went to short investment products. In other words, they\u2019re betting that Bitcoin and other crypto assets will see a further decline in price. BTC has already plunged to around $15,500<\/a>, marking a new low for the cycle. Although Bitcoin can go much lower, we are nearing the end of the current four-year cycle. So, the bottom could be close.<\/p>\n Fidelity Investments, one of the earliest institutional backers of digital assets, is being strongly urged by members of Congress to limit its Bitcoin investment offerings. This week, Senators Elizabeth Warren, Tina Smith and Richard Durbin once again called on Fidelity<\/a> to reconsider its Bitcoin 401(k) product offering in the wake of the FTX disaster<\/a>. \u201cSince our previous letter [from July 26, 2022], the digital asset industry has only grown more volatile, tumultuous, and chaotic\u2014all features of an asset class no plan sponsor or person saving for retirement should want to go anywhere near,\u201d the senators wrote. The crypto skeptics can take their victory lap for now, but Bitcoin will get the last laugh. <\/p>\n The implosion of FTX has made it clear that the digital asset industry has serious problems. I joined @SenWarren<\/a> & @SenTinaSmith<\/a> to urge Fidelity to do what is best & reconsider its decision to expose retirement accounts & employer-sponsored plans to these volatile assets. pic.twitter.com\/qQn4PF80AP<\/a><\/p>\n \u2014 Senator Dick Durbin (@SenatorDurbin) November 21, 2022<\/a><\/p><\/blockquote>\n Concerns around Grayscale\u2019s Bitcoin Investment Trust (GBTC) began to mount last week after the company refused to provide on-chain proof of its reserves<\/a>. Now, investors are worried about whether Grayscale\u2019s parent company, Digital Currency Group (DCG), could be forced to liquidate a portion of its GBTC to cover a massive hold in Genesis Global Trading\u2019s balance sheet. What\u2019s the relationship between DCG, GBTC and Genesis? In this week\u2019s Market Report, Marcel Pechman and I discuss this relationship and why it matters to Bitcoin investors. You can watch the full replay below.<\/p>\nSam Bankman-Fried says he is \u2018deeply sorry\u2019 for collapse in letter to FTX team<\/h3>\n
FTX owes over $3 billion to its 50 biggest creditors: Bankruptcy filing<\/h3>\n
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FTX crisis leads to record inflows into short-investment products<\/h3>\n
US senators urge Fidelity to reconsider its Bitcoin offerings after FTX blow-up<\/h3>\n
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Before you go: Could Grayscale trigger the next Bitcoin price collapse?<\/h3>\n