FTX's demise part 3: How Sam Bankman-Fried's crypto empire imploded

Episode 112 of Season 4 of The Scoop was recorded live with The Block's Frank Chaparro, F9 Research General Partner Jim Greco, and Crocodile Labs Founder Douglas Colkitt.

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In this breaking news episode of The Scoop, we continue our coverage of FTX’s demise with Jim Greco, a general partner at F9 Research, and Douglas Colkitt, founder of Crocodile Labs.

According to Greco, many market participants knew about the relationship between Alameda and FTX. Still, few thought former FTX CEO Sam Bankman-Fried would risk jeopardizing the success of his exchange:

“Most professionals knew of the Alameda connection, but we all thought that this exchange is so valuable — it's worth $32 billion — why would he do something that would destroy the equity value in this exchange?” said Greco.

Not only did Bankman-Fried end up destroying the value of his exchange, but it’s now apparent that he did so in an effort to prop up Alameda’s unsuccessful trading operation, said Greco.

Colkitt added that recent events have shattered the perception that Alameda was one of the top performing firms in the space:

“Nobody really expected FTX to run out of money because they thought Alameda must be making so much money, but it's really quite the opposite — they just seemed so incompetent that even with all these advantages they were losing money,” said Colkitt.

During this episode Chaparro, Colkitt, and Greco also discuss:

  • Whether or not the SEC protected U.S. investors
  • Why FTX chose the Bahamas to set up shop
  • How the industry rebuilds from here


This episode is brought to you by our sponsors Tron, Ledn

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Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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About Authors

Davis Quinton is the Director of Podcasts at The Block and runs our flagship podcast called The Scoop, hosted by Frank Chaparro. Since joining The Block as an 'intern' in early 2022, he has worked closely with leaders across departments to translate The Block's written content into engaging multimedia formats. He holds a degree in Social Research & Public Policy from New York University in Abu Dhabi and is based in Sydney, Australia.
Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].

Editor

To contact the editor of this story:
Tim Copeland at
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