The FTX Collapse: A Deep Dive into the Downfall of a Crypto Giant

hello everyone so this is part two of the FTX Story the FTX collapse um as we have now seen it and the

collapse of the world's second largest exchange so we've already covered how we got to this point in our part one in the

video so if you haven't watched it I have the part one Link in the description and you can watch it by

clicking this link as well so Sam Bachmann fight was a billionaire became a zero in like less than a week it just

transpired so we'll we'll see what happened in part two of the story from where we left off right so as usual

disclaimer and warning that I'm not a financial advisor or a investment expert and none of my videos are for financial

advice and I'm active on Twitter at the rate Senator London so let's start from the climax of that particular episode

the first episode that I started with this statement that um well I made the movie in Tamil I

actually stopped it in that point and I suggested that it's probably more episodes will come and that's exactly

what happened so the same day that I released the video more and more episodes and chapters followed and so

FDX and alamata research at that point from that point onwards started collapsing and fully declared for

bankruptcy and fully collapsed so you know we haven't even seen this kind of a drama in Game of Thrones and

that much of drama happened within a span of like 10 days um so originally you know we stopped uh where Caesar had

said this from banance had said that they're going to acquire SPF and they were in the process of non-binding

yellow iron that's how it looked as if that binance would be taking over sees it but as soon as I finished that part

in Tamil um the whole thing broke down basically they said that they did corporate due

diligence Finance had said did corporate due diligence and they came out and said that

the mishandling of customer funds and the investigations that are going ahead means that we cannot pursue the

potential acquisition of ftx.com so the acquisition of ftx.com world's second largest exchange would have put seized

and Finance in in a superior position they said that because of corporate due diligence they're not going to purchase

the FDX which came as a shock or a surprise at that point to most people a lot of people expected that the Takeover

would happen because that's how the events were lining up till that point in time

so when this announcement came it was it was more chaos that that followed I would say and this is a very disturbing

after story because one till that point of time everybody thought that alamata research's main crime was to overuse

their FTD tokens which was similar to what Luna had done which was technically from the book's perspective it wasn't

the crime it was a risk or a unethical operation or a high risk trade um but what they were being accused of

now is that they have been misappropriating customer funds this is like you put your money in a bank like

icic or HDFC or HSBC and they take your money and they go to casino and play with your money and lose that money it's

almost as equivalent to that that the due diligence and more investigation continue to reveal not only did the

issue these ftt tokens and used it for collateral and lending and borrowing but they basically took customer assets

customer funds and without their knowledge completely unethically and and total crime they had used that funds and

lost that funds in trading or high risk trades Perpetual trades for that matter

so further you know let us try to understand what is a custodial and

non-custodial wallet you know from 2021 I've been explaining about what does it mean between uh what is the difference

between a custodial and a non-custered wallet so binance wazira.com FTX these are all like hybrid exchanges which are

custodial wallets which means that to enable you to buy and sell crypto quicker they also give you a wallet

which is a custodial wallet which means that you give custody of your crypto to them and trust them with your crypto or

your assets this is similar to how the banks operate which are custodial um you know Holdings of our money with

the banks so there's a there is a bit of trust that we give to the bank similarly in this case it is supposed to be a

safety box it is it is completely our assets but we have given custody of our assets to the crypto exchanges just for

safe keeping under no circumstances are they allowed to touch our crypto or our assets that is standing based on which

you give the crypto to the these exchanges basically so ah we talked about on the other hand

non-custodial wallets like you know crypto.com D5 wallet metamask engine Kepler which we have made demos of in

our video which are all non-custodial where you have full control of your funds this is the difference between

custodial and non-custodial wallets and unlike Banks the expectation in a custodial wallet again and again is that

the funds are even though given custody to ah the exchanges they are kept safe and you should be able to withdraw your

assets at any point of time that should be that should be considered like you know keeping a gold or Jewels inside a

safety box that safety box is meant to be accessed and controlled only by us even though the custody is with the bank

right so they are not allowed to sell or withdraw the the money or the assets on for their own benefit this is a trust

this is a huge trust that we are putting in these crypto exchanges and most crypto exchanges have said openly that

they don't touch the asset funds and a set of the customers and they keep a one is to one result

unfortunately for us FTX which was the world's largest crypto exchange seems to have literally gambled away with all our

customer funds and assets and without the customer knowledge they have lost all of those assets or most of those

assets in leverage trading which means if Consolidated people had put four or five billion dollars worth of Assets Now

less than one billion dollar probably worth of assets is sitting just as an example that's how much the damage was

eventually which started getting revealed it all started from this corporate due diligence

so everybody talks about proof of results and proof of feasibility in right from episode 10 about two years

back I kept saying that if you putting your money into a crypto exchange especially a custodial wallet trip for

exchange they need to keep your money they need to keep your assets in such a way that it should be like a glass box

where you can see it all the time and it should be a bulletproof glass box you know like a basically I was talking

about proof of resource where you need to have visibility of the fact that your assets are being kept safe right so

this is where crypto.com or binance everybody started publishing their cold wallet addresses and said that you know

we have one extra one customer assets and we will provide audited proof of resource and there are some exchanges

like gate.io for example who had long time back they had published a concept called Merkel tree proof of reserves

which are all industry standard things that should become common for all the exchanges but unfortunately FTX did not

have any of this in practice so we go back to this proof of Reserve we'll go back to it again but

after everything turned out SBF basically confessed in a long written apology that you know they had misoper

operated customer funds and they were in fact you know nearing ah insolvency for for their exchanges he was showing a

little bit of regret remorse and he will he was saying that you know even though he was wrong he was really feeling sorry

about it and he'll try and give transparency and he'll be more and more transparent but there was a huge lie in

what he was saying even on that particular day there was probably one person trust that was there at that

point when he had tweeted on November 10th but on November 10th he said that it was only about FTX International and

Alameda but there was nothing wrong with the FTX U.S the U.S based exchange that accept Americans and it was still open

at that point of time for new customers to come and deposit account the money into the the accounts and he was saying

the 100 liquid users can withdraw it whenever they want and nothing is wrong with the U.S entity within 24 hours in

fact exactly 24 hours later on 2 14 PM the next day FTX released a press release and statement saying that all of

the entities you know literally 60 plus entities FDX FDX America research everything have been declared

bankrupt and chapter 11 has been initiated which is exactly what FTX SBF was saying Assam was saying that it's

not going to happen and it's not the case but within 24 hours he was proven wrong or he was proven to be lying

openly about it so completely when you understand someone can lie so openly and blatantly that

when that is when you go back and look at whatever he has been doing and how he's been manipulating the markets how

he's been manipulating you know with his political Cloud how he's been trying to take away D5 from the crypto and trying

to get control of user funds so that he could live or he could do more and more of these things when you don't have a

choice of self-custodial of your character ultimately you're going to end up you know providing your assets to

somebody like SBF or FTX who are going to continue to misappropriate funds so if those events of part one had not

happened then we wouldn't have come to this point we wouldn't have known that SBF was such a criminal or FTX was doing

such a big crime behind the scenes between us so in fact at this point then you are actually thankful to all of the

events that happened and that led us to this point that at least now at least now before SBF grew even further before

BX became you know even bigger of an exchange at least now we were able to understand the truth behind what was

happening actually in FTX and SPF so what does it mean right now right the

collapse what does it mean um you know user funds of FTX because of the administration could get locked forever

um the chapter 11 would mean that nobody would get their funds because there's probably nothing left from an insolvency

perspective at least in the case of Luna only those people who had invested in one

particular ecosystem you know out of all the thousands of tokens that exist anybody who did not invest in lunar or

USD didn't get an impact but the loss was still huge but there were several red flags about Luna a lot of people

were explaining with evidence why Luna would fall and why USD such a bad option and there were so many red flags so

people chose to invest in a crypto that was having so many red flags and so it was partly on them that they node all

the red flags for example in our Channel we never not even once we talked about Luna not even once we talked about USD

as an ecosystem did not even believe in USD as a stable coin so we never have mentioned those kind of tokens because

we knew it was highly risky so that was different but this was different FTX was a trusted exchange it

was the second largest crypto exchange till that point of time uh Sam backman fight was a poster boy of crypto he was

he was well trusted and there were in these military Flags they were hardly any red flags you know in truth they

were hardly needed trucks which meant millions of customers had their crypto on funds in FTX not only FTX you know um

they probably had followed every safety precaution to go to a centralized exchange which didn't have any of these

danger signs or any of the issues that they've traditionally seen and they've chosen a top stream exchange which

mainstream media as well as a lot of influencers had been promoting again FTX is another exchange which we've never

talked about in our videos because personally I have only talked about those exchanges that uh you know I have

used and will come to it and again in a so in a minute but this eventually means that this is the biggest Black Swan

event for crypto and it's it's again only going to get worse because all the lenders who've learned from research you

know everybody is going to go for a collapse because nobody is going to recover their money from FTX or from

alamata research so what can we do now and what am I doing so like I talked about right centralization's perspective

there are only a few centralized exchanges that I personally have my funds in so

um you know like in divided between them maybe I have like one percent in in each of these uh exchange centralized

exchanges because we still need a centralized exchange to have an easy entry point and then exit so binance

crypto.com bit true coinbase these are the ones that have at least shared the proof of resource to some extent and

one that I personally trust again you know this this is not a promoted content this is definitely nothing to do with

that I have any affiliation to any of this I have no affiliation to these this is just a personal uh Choice from my

perspective and there are a few exchanges that I have a confidence on gate or diver for example because the

pioneered the Mercury proof of resource from almost 2020 when nobody had talked about proof of resource for a crypto

exchange they were the first ones to start talking about it was your ex has a huge credibility to Michelle seti who's

one of the Pioneers in India from a crypto perspective so but I have moved my funds out of azure X to binance for

personal reasons so I still want to give that update geotass again it's a personal choice because depositing and

withdrawing of funds probably the least concern that I had with any Indian exchange was your test I should say but

their order book and liquidity is extremely limited SO trading is probably not advisable in geotis but you know

it's a good entry point and an exit criteria I've also mentioned ones about polynics

but I don't have any funds there and I don't trade with anything that has a deep link with Justin sun because I kind

of put him in the same league as doc one you know despite the fall of USD and Luna uh when the world was against uh

you know uncolateralized stable coin Justice and went on to launch usdd which is a ticking time bomb in my mind that

it is and he has also launched several new tokens with no utility whatever and it's just continue to make billions and

billions from it and uh you know just he just launches one coin almost like every month and that's how he operates and

there's a lot of risk associated with him so Pauline X got a deep link with Justin and I don't really uh trade with

politics anymore so as for the other Indian exchanges again the ones that I highlighted were a personal choice uh

the rest of the Indian exchanges there are several that I actually looked into and uh most big crypto exchanges have

actually stopped crypto withdrawals blockchain withdrawals meaning you can only deposit money and withdraw money

and but you can only trade within the crypto exchange defeats the whole purpose of having a crypto exchange

because you need a crypto exchange that allows you to transfer your crypto assets on the blockchain and if a crypto

exchange doesn't allow you to withdraw your crypto on the blockchain then it's a big red flag for example even wazirex

for that matter supports and in my personal experience supported only five protocols I think somebody pointed out

that it also support LTC network but you know Bitcoin erc20b P2 xrp and xlm were the only ones that I have seen

personally that they support they don't support many of the lock low cost popular protocols like polygon B20 crc20

or Cosmos or any of those for that matter so it's really difficult when you want to withdraw a token like injective

for example you are absolutely not able to do and even for a BNB smart chain if you want to withdraw it directly to BNB

smart chain for D5 you can't withdraw you have to take it to a binance like exchange and only from there you can

draw or you need to take it erc20 paying a high fees and then you need to use a bridge outside of the exchanges so it

defeats the whole purpose but again at least they support a few few protocols which in which case you know they are

still open but a lot of Indian exchanges do not have any crypto based withdrawals at all enabled um again in full

disclosure ninety percent of my funds are in D5 wallets and what are the non-custodial wallets that I use I use

about different wallets but not all of them are cold wall access this is another question that I can keep getting

asked I don't have all of my funds on cold wallets I do have a cold wallet that I use I'll make a video on this but

I've spread it out into different non-custodial wallets so that it's easier for me to maintain those funds

for different purposes the ones that I use are metamask you know cdfc D5 wallet.com D5 wallet trust wallet that's

the least used wallet trust wallet out of all of this that's probably one that I don't trust so much in terms of a D5

wallet in terms of a non-custodial wallet Kepler wallet and that's because of the cosmos

ecosystem ends taking Martian wallet is because of the Aptos ecosystem engine and atomic I've talked about it but I

have tiny funds left there anymore injective strictly speaking is a layer 2 wallet it's not a separate wallet on its

own because it needs a Kepler wallet or a metamask to operate behind it but still that's something that I use

connected to my Kepler wallet where I have another second layer of production I would say and the gas fees on Kepler

injector is like one cents or even lesser it's probably much much lesser than a centralized exchange for that

matter xuim I also use for xrp but that's kind of still not an experimental stage at this point so again coming back

to SPF so SBF has been new in our previous episode was completely against decentralized finance and the framework

that he had supported and he was completely against the non-custodial wallets even alamata research CEO was

advocating for the regulations against D5 now the amount of regulations that they wanted to get enforced would have

meant that it would have been difficult for people especially living in the U.S to start using D5 or start using

custodial wallets or non-custodial wallets for that matter which meant the amount of money that they they were

paying for the U.S senators or the you know Democrats and Republicans standing in the elections they were lobbying with

the money they're almost like a bribe that to have control of the crypto of people's crypto and that basically a

corruption at a different level almost um you know that's how much they were they were you know trying to lobby for

control over crypto and you know that the fraud that they were committing was just beyond comprehension at this point

with all of this being put into perspective and when you combine all the stories together the fraud that they

were committing was just beyond comprehension and now seeing everything that we have seen and it's a complete

blessing in disguise that whatever had happened in the last few days especially what we described in part one and the

role that Caesar played I think you know from a people who assess them perspective it's a moral win for the

people that we need to take it at least now even though the price that we have paid is so heavy and the the collapse of

the the market and and all the people who lost their money in the action at least it's better that it's happened now

than at a later point in time when SPF had gone to control so much and uh he's been successful in his lobbying and he

gained so much of control with this framework uh it would have been really difficult to change scores from that

point in time so it's probably better that his corruption and his crimes have been exposed right now

but unfortunately the mainstream media and the refugees that they're creating and they're still siding with SPF and

that is the worst part at this point uh there's there's an fud that is happening like you know binance for example was

being attacked crypto.com being attacked Bloomberg for example published an article saying that binance results are

full of busd again these are one is to one results of the users you know binance should not have converted these

tokens for without the user's permission which is exactly what they did they did not convert it they were holding in

their binance resource if the user is holding busd they were also holding bust in their resource which is exactly what

you would expect from a decent exchange but Bloomberg went on saying that unit is a risk that they are actually holding

so much of PUSD without even understanding anything about um what why the the proof of Reserve

should should have be used in the first place and they went ahead to delete their article so New York Times for

example published an article still supporting SBF even today that's how much you can you can understand how much

the the cloud that SBF must have had on these organizations or in these mainstream media so anything that gets

published in mainstream media I will take it with a pinch of salt at this point um because you know that they are

continuously creating fud and all the things that they're publishing there's probably very very little uh truth band

what they're publishing at this point again strong advice create a Twitter account and follow some important people

in Twitter and you know if you're from a different language for example go to translate.google.com and convert the

tweets to your own language like I mean or different languages so that you can you can understand it better and there

are like in Tamil for example there's crypto terminal and crypto Vogel these are a concept you can follow these are

people that you can trust and and follow like you know even if you don't trust me it's basically a lot of these

influencers uh who have been supporting FTX you know that you should not follow them because they have been not doing

any of the due diligence and they've just been you know getting paid to do a brand investment for exchanges learning

f t x so ah stay safe at this point so hopefully this chronological sequence of events helped you understand where we

started with FTX and where we ended up and why we ended up with the biggest collapse of the world's second largest

exchange and how SBF became from a poster boy of crypto to a criminal in the crypto world and how he's changed

the face of crypto as we know it okay until next time thanks bye