The Crypto 5

Greetings!

Some say it's Friday. What we do know, is that it's a day that ends in "y". For those just entering the chat, we have your weekly wrap of must-reads and explainers on the industry that doesn't sleep.

Welcome to the Crypto 5.

We've heard sharing is caring, so think of sharing this newsletter as a seasonal and sustainable gift!

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1. The Block

How many creditors is too many?

A court filing showed “Bankrupt crypto exchange FTX may have more than one million creditors” according to this story.

I think we can agree that complicated might be an understatement.

Oh and by the way, we are only on Monday.

2. Protocol

By Tuesday, the crypto industry and mainstream media started asking more questions about where the US Securities and Exchange Committee was during this crisis. Protocol news asked directly if it was Secretary Gensler's fault or did it prove he's right?

“The argument goes, the SEC, under Gensler’s leadership, has done such a terrible job in providing regulatory clarity to crypto companies in the U.S. that it forces companies such as FTX to set up shop in other countries known for loose regulations — which, in turn, encouraged SBF to do really bad things...Did regulators force FTX to conduct itself in the way it did? No. But they did create a situation where FTX could take dangerous risks with no repercussions.”

On the other side, “John Reed Stark, a staunch crypto critic and founding chief of the SEC’s Office of Internet Enforcement, said Gensler “saved millions, perhaps even billions, in investor crypto-losses” by taking on the industry “despite mammoth political opposition and rogue defendants with infinite financial resources.”

Read the indepth piece by Benjamin Pimentel.?

This newsletter writer was very saddened to hear that Protocol would be closing its doors. I've always valued their thoughtful takes on emerging tech and working with teams on both coasts of the US. Thanks to Bennett Richardson and Jamie Condliffe.?

3. New York Times

Still on Tuesday.

Many NYT subscribers start their morning news scans with Andrew Ross Sorkin 's DealBook newsletter. For the past two weeks, the unfolding chaos has been a staple, even topping Twitter for the top news spot.

So how did the industry take this article by the New York Times? Well,

4. Blockworks Daily Newsletter

Speaking of newsletters.

For the crypto curious, the Blockworks Daily newsletter is worth a sign-up. Byron Gilliam's column this week makes the case that FTX was the worst bank in the world, the worst hedge fund and SBF himself was the worst video game player, maybe not in the world...

The Worst Bank:

“You don’t make venture investments with?borrowed money.?That’s nuts.”

“The funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments...That’s fraud.”?

The Worst Hedge Fund:

“Without Alameda backstopping FTX’s liquidation engine, there was no reason for anyone to trade on FTX. For a while, those losses were more than offset by the gains Alameda racked up.”? But then the LUNA happened.

“We’re only finding out now because SBF was able to keep up appearances for this long by fraudulently siphoning off customer deposits to plug an ever-growing hole at Alameda.?Alameda, it turns out, was not a good hedge fund at all.

“So, while we all assumed Alameda’s privileged relationship with FTX was a license to print money, it may well have been the exact opposite: Their not-very-good algos were probably subsidizing all of FTX’s other professional customers.”

The Worst Video Game Player:

Personally, my gaming skills peaked in the mid-90s with Super Nintendo, so i'm no one to talk. But apparently SBF was given street cred for playing League of Legends during pitch meetings. Obviously, the rug pull continues...

Enter AOC:

5. CNBC

On Thursday, the FTX’s new CEO candidly told us what was under the hood.

In his “40 years of legal and restructuring experience,” he had never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

John Ray III?led the restructuring of Enron and is now tasked with figuring out where to go from here. He has a plan: creating “accounting, audit, cash management, cybersecurity, human resources, risk management, data protection and other systems that did not exist, or did not exist to an appropriate degree, prior to my appointment.”

For those in need of a Enron refresher, Time has a good piece.

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We are finally at Friday. Thanks for getting here with me.

-A

Before you go

Next week is Thanksgiving in the US. For many, it may be the first time you are gathering as a family. Nervous? Wired's got you You Won't Win the Thanksgiving Fight. But You Can Survive.

Or you can watch videos of cute animals.