Erik Voorhees and Cobie on Why FTX Loaned Out Customers’ Assets

 Erik Voorhees, founder of ShapeShift, and Jordan Fish, aka Cobie, crypto investor and host of UpOnly, talk about the collapse of FTX. 

Show highlights:

• the links between FTX and Alameda
• what kickstarted the blowup of FTX
• why Erik and Cobie think that Bankman-Fried’s behavior was “sociopathic”
• why the $10 billion hole is so shocking to Cobie considering the advantages that FTX had as a company
• whether this would have ever happened if the prices hadn’t plummeted in the bear market
• the tension between advocates of privacy and those who want to limit criminal activity
• why Erik believes that SBF’s donations to both political parties are bribery
• whether regulators can prevent an exchange from collapsing
• whether Changpeng Zhao did a better job at investigating FTX than anyone at the SEC
• the likelihood that this will result in criminal charges
• how blockchain technology is the solution to the problem of centralized exchanges doing things in the dark
• Tether’s decision to freeze USDT owned by FTX
• Erik’s response to Bitcoin maximalists who say FTX was caused by altcoins
• whether it is a mistake for exchanges to issue their own tokens
• how big the contagion could be in the industry
• why nobody should leave a significant amount of their net worth in a centralized exchange
• Erik’s message to regulators
• whether SBF was aligned with the values and the ethos of crypto

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Erik:

• Twitter
• ShapeShift
• Previous Unchained episodes:
  • Why ShapeShift’s Erik Voorhees Thinks Toxic Bitcoin Maximalism Is Bullshit
  • Shapeshift’s Erik Voorhees on How Crypto Will Separate Money and State

Cobie:

• Twitter
• Substack
• UpOnly
• Previous Unchained episodes:
  • Cobie and Chris Burniske on How to Navigate a Crypto Bear Market

Episode Links

Previous coverage of Unchained:

• Sam Bankman-Fried on How to Prevent the Next Terra and 3AC
• The Chopping Block: FTX: The Biggest Collapse in the History of Crypto?

FTX Collapse:

• • FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall
  • SBF’s video talking to regulators

• Unchained coverage:

• FTX May File for Bankruptcy After Binance Walks Off the Deal
• FTX Needs $8B to Meet Investor Withdrawals: Report
• Tron Founder Justin Sun Says He Is Working With FTX on a Solution
• US DOJ Joins SEC and CFTC Probe of FTX
• FTX-Issued Wrapped Solana Tokens Could Add to DeFi Contagion: wBTC Creator
• Sequoia Capital Writes Off $214M FTX Investment to Zero

Binance’s dropped deal with FTX

• • CZ’s announcement
  • SBF’s announcement
  • Binance’s merkle-tree proof-of-reserves

• Unchained coverage:

• • Binance Set to Buy FTX Amid Liquidity Crisis
  • SBF’s Net Worth Plummets 94% In One Day: Report
  • There are Rumors that Alameda Went Down With 3AC in Q2
  • Alameda Owes More Than $30M in DeFi Debt
  • Coinbase and Genesis Declare No Exposure to Collapsing FTX 
  • Binance Might Have Triggered a Liquidity Crisis as FTX’s Main Wallet Lost 290K ETH in Two Days
  • Binance to Liquidate Millions Worth of its FTX’s Token Holdings
  • FTX’s Stablecoin Reserves Hit One-Year Low
  • Alameda’s Balance Sheet Sparks Controversy

Crypto regulation

• Industry Leaders Debate How to Regulate DeFi
• Bankless debate between SBF and Erik Voorhees