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James Altucher


FTX and Binance is a crypto soap opera.

This ia. crazy story and we might not get to the bottom of it. What I say below is speculative and might not be true but a lot of people have confirmed aspects of this.

    1. First off, CZ (CEO of Finance) and SBF (Sam Bankman-Fried) were friends in the past. They grew up in this industry together and CZ even invested in FTX


    2. CZ was born in China and his family moved to Canada

    The China ==> Canada route is a well known path for people in China with money to get their money out of China when regimes change. When regimes change in China a lot of people disappear. This is well known. Watch the latest CCP meeting to see an example live on TV.

    3. A big issue in Silicon Valley for people of Chinese descent

    There are private meetings at places like Google and Apple for people born in China who all have the same issue: someone from China calls them and in a friendly voice says, "We just want to say hi and by the way we are here with your Aunt and Uncle and they are great people and they say hi also."

    This is not a conspiracy. This ACTUALLY happens. Nobody talks about it.

    It's a non-so-subtle way of China saying, "hey, you better be here when we need you."

    4. Binance and FTX, like all major exchanges, were being looked at by regulators

    This is not a big deal. Everyone wants to do business in the US and FTX and Binance are the biggest so of course they would talk to regulators.

    5. If you get the US, you get the world

    So it becomes competitive. Correctly or incorrectly. SBF was saying to regulators what I was saying above: "watch out for the CZ-China connection."

    6. CZ heard this and went apeshit.

    Nobody wants to be in trouble with US regulators. I would be upset to if my friend/competitor was saying I was a spy to regulators. Even if I was a spy!

    I would think to myself (if I were CZ), "SBF is trying to put his hand in my pocket. I will destroy him."

    7. CZ takes action

    After an easily explainable article from Coindesk questioning the balance sheet of FTX's trading arm, Alameda, CZ announces, "we are selling all our $FTT in light of recent revelations about FTX".

    8. This is a perfect tweet to inspire paranoid speculations.

    The crypto market has PTSD about Luna and Celsius and now everyone doesn't want to wait around to see what CZ means about FTX. They want their money out.

    9. SBF states:

    "that's crazy. We have a billion dollars cash to handle withdrawals. That's more than enough. We've never had anywhere close to that in withdrawals."

    10. In the next 24 hours, FTX has a net one billion dollars in withdrawals.

    There's that billion dollars. Gone.

    If everyone went to the bank on the same day to ask for their money back, the bank would not have the money.

    A bank takes your money, and gives you 2% interest on it. They then take your money and lend it to someone else to buy a house at 8%.

    The business model of a bank is they make their profits on the difference between what they make on your money (8%) and what that money costs them (2%).

    They then make up for all the costs of their branches with other fees and services. Like 2% ATM fees, etc. The rest of their business breaks even or loses a little.

    Now, WHAT IF there is a run on a bank. Everyone wants their money back.

    Well, the bank doesn't have it! They lent it to Joe the home buyer.

    So they go to the Federal Reserve, which is a big bank, and they say, "Hey man, we're 'too big to fail' and we need a little bit of money. Do us a solid."

    And the Federal Reserve will give them whatever money they need. So the really big bank in the US are totally safe assuming you believe in the dollar, which you do.

    But if an offshore crypto exchange gets a run on their assets, they have no Federal Reserve of Crypto to turn to. They basically run out of money, like old-fashioned banks used to. This does not mean crooked behavior. It's a run on the banks.

    In 1933, to prevent a run on the banks, FDR actually CLOSED all of the banks until things calmed down.

    11. SBF calls his old friend CZ and says, "if you don't buy us, you'll never get out of your billions of $FTT. So buy us."

    12. CZ says "sure. but we have to do due diligence first."

    A deal is announced, everyone is relieved. But people are waiting to see what the due diligence says.

    13. CZ uses this as an excuse to see all the finances of FTX.

    I'm willing to believe he absorbed all the information in one day. His real plan from the beginning was to put the final nail in coffin (this is speculative believing on my part but it makes sense given the story).

    He gets information for free (information is power) and then he says what he was planning to say all along. "books don't look good. We are out."

    This is the NAIL IN THE COFFIN. This was CZ's goal. TO CRUSH SBF and destroy his soul.

    14. But did CZ overplay his hand?

    If you can't trust the biggest exchanges, how can you ever trade or buy crypto?

    Crypto needs a billion users before it's fully mainstream. And the "user interface" to the industry is horrible.

    It's hard to buy a Bitcoin for mom and pop in Indiana. It's hard to go from wallet to wallet. No mainstream investor or user is going to buy crypto on PancakeSwap. There's no customer service on a lot of exchanges. Knowing what wallets to use for which crypto is a mess. Transferring crypto from one blockchain to another is impossible so money often "disappears".

    These aren't bad things. It's the beginning of an exciting industry. This is like the Internet in 1994.

    But CZ overestimates how much people are willing to handle another crypto mess in the middle of a bear market.

    Are BTC and ETH going down further?

    Until there is some sort of good news, these coins will go down further. But I will say, and I'll state the reasons why below, BTC and ETH are enormous buys here. But...short term is short term and it's painful and it would be good if this didn't happen.

    15. What would be good news:

    Some combination of above:

    - good inflation data tomorrow morning will send liquidity into the markets in anticipation of a Fed pivot on raising interest rates.

    - another entity buying FTX. SBF once joked about buying Goldman Sachs but now it might be the other way around. Someone else has to get involved to establish credibility in the space.

    All of these tech billionaires are gung-ho on crypto. I'd be surprised if we don't see them involved but, heck., ,they are billionaires and I'm not so I don't know how they think (even though I wrote the book, "Think Like a Billionaire" based on my dozens of interviews with billionaires on my podcast);

    16. If no good moves then chaos for awhile. But good news can happen suddenly and markets will reach fast.

    17. Long term the picture is good.

    the current banking system is a relic of a 100 year old banking system,

    - I can only trade stocks on an exchanges open at 9:30am and closed at 4, 5 days a week, off for holidays.

    - bank tellers

    - ATM machines

    - wiring money where the money literally disappears for a day or two.

    - trading stocks that take 2-3 days to "clear".

    And on and on.

    Crypto is a massive upgrade to the global financial system. Once the picks and shovels part is over we will be left with a system where:

    - anything that has any monetary value at all can be traded with anything else of value.

    For instance, I'd be able to tokenize and trade 5% of my house equity for shares of McDonalds or for royalty streams on musicians or reward miles for planes, and on and on. And this trading will occur 24 hours a day with minimal fees, saving the planet tens of billions in transaction fees.

    There are currently $1.4 QUADRILLION in derivatives on the planet. This number goes up (and in a much safer environment) when crypto goes fully mainstream. It doesn't go up by 10% but by 10,000%.

    This is the ultimate use of crypto. I can explain this further but that's for another thread.

    18. Summary:

    Short-term is a cluster*ck without some good news.

    This entire battle was personally motivated but maybe a slight chance something more insidious. Although it's insidious enough that CZ executed on the perfect plan to annihilate his competitors.

    Long term: To quote Nina Simone,

    "It's a new dawn
    It's a new day
    It's a new life
    For me
    And I'm feeling good
    I'm feeling good"

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