It’s time for Cryptonite - our monthly roundup of all things crypto - with Tejaswi Nadahalli.
You can follow Tejaswi on twitter @nadahalli and he blogs at tejaswin.com
While we were recording this episode, Changpeng Zhao, the founder of Binance (the world’s largest crypto exchange), was trying to trigger a run on FTX, the world’s third largest crypto exchange.
It looks like he succeeded.
Timeline
The first salvo from CZ:
![Twitter avatar for @cz_binance](https://substackcdn.com/image/twitter_name/w_96/cz_binance.jpg)
The denial.
Lines begin to form.
![Twitter avatar for @web3isgreat](https://substackcdn.com/image/twitter_name/w_96/web3isgreat.jpg)
![Speculation emerges around Alameda Research and FTX solvency; Binance liquidates holdings On November 2, CoinDesk published a leaked balance sheet from Alameda Research (a trading firm also owned by FTX founder and CEO Sam Bankman-Fried). The sheet suggested that Alameda held substantial amounts of FTX's $FTT token. "While there is nothing per se untoward or wrong about that, it shows Bankman-Fried's trading giant Alameda rests on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto," CoinDesk wrote. Following the report, Binance CEO Changpeng "CZ" Zhao announced they would be liquidating their FTT holdings. CZ also took a shot at SBF's recent controversial policy recommendations, writing, "Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won't pretend to make love after divorce. We are not against anyone. But we won't support people who lobby agai](https://substackcdn.com/image/fetch/w_600,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFg_JPm1WIAAz6RW.jpg)
![SBF first appeared conciliatory towards Binance, writing "I respect the hell out of what y'all have done to build the industry as we see it today, whether or not they reciprocate, and whether or not we use the same methods. Including CZ. Anyway -- as always -- it's time to build. Make love (and blockchain), not war." However, he later wrote that "A competitor is trying to go after us with false rumors" and urged that "FTX is fine. Assets are fine."](https://substackcdn.com/image/fetch/w_600,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFg_JPm2WIAIHBwR.jpg)
Liquidity dries up and withdrawals are frozen.
![Twitter avatar for @TheBlock__](https://substackcdn.com/image/twitter_name/w_96/TheBlock__.jpg)
A shotgun marriage is proposed by the raider himself.
![Twitter avatar for @SBF_FTX](https://substackcdn.com/image/twitter_name/w_96/SBF_FTX.jpg)
FTX equity is a donut.
![Twitter avatar for @tastybits](https://substackcdn.com/image/twitter_name/w_96/tastybits.jpg)
![Image](https://substackcdn.com/image/fetch/w_600,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFhE4ZcWX0AEANzd.jpg)
![Image](https://substackcdn.com/image/fetch/w_600,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFhE4ZcXWAAE6sXS.jpg)
Some large profile investors take a bath.
![Twitter avatar for @EricNewcomer](https://substackcdn.com/image/twitter_name/w_96/EricNewcomer.jpg)
Maybe, it’s the future of finance after all.
So how did Binance end up with FTX equity?
![Twitter avatar for @HideNotSlide](https://substackcdn.com/image/twitter_name/w_96/HideNotSlide.jpg)
![Image](https://substackcdn.com/image/fetch/w_600,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFhDfp-WWIAE7zSd.png)
How did FTX get here? Probably because it tried to bailout Alameda (Thread)
Are we now then looking at a potential Alameda insolvency scenario (Thread)? In which case a massive liquidation event is likely (Thread).
What’s the next domino to fall?
Links
If pre-mines are equities, then most of DeFi is hosed.
![Twitter avatar for @BryanJacoutot](https://substackcdn.com/image/twitter_name/w_96/BryanJacoutot.jpg)
![Twitter avatar for @LBRYcom](https://substackcdn.com/image/twitter_name/w_40/LBRYcom.jpg)
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Tejaswi pointed out that there’s actually a Bitcoin Miners ETF (ticker: WGMI, because, why not?) Launched in February this year. They should’ve launched an inverse of it simultaneously, NGMI.
Because a lot of miners are not making it.
Core Scientific may consider bankruptcy following uncertain financial condition (cointelegraph)
![Twitter avatar for @web3isgreat](https://substackcdn.com/image/twitter_name/w_96/web3isgreat.jpg)
![Iris Energy Bitcoin mining firm close to defaulting on loans of $103 million "Iris" in navy blue and "Energy" in green(attribution) Iris Energy, an Australian "sustainable Bitcoin mining company", has announced that they are close to defaulting on loans used to purchase $103 million of Bitcoin mining rigs. These machines depreciate in value quickly, and are currently estimated by the company to be worth $65–$70 million. At the moment, they produce $2 million in gross profit from mining Bitcoin, which is not sufficient for the company to meet the $7 million of loan payments each month.](https://substackcdn.com/image/fetch/w_600,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFgkmDPZWYAAxTRv.jpg)
Bitcoin mining is a highly lucrative business as long as the price of bitcoin keeps going up — and as long as investors believe it will keep going up.
When the price crashes — and the price of bitcoin has halved since the start of the year — crypto miners face margin calls, they have to dump their bitcoins, and reality comes knocking.
But somehow, bitcoin’s hashrate keeps growing and growing. (bitcoinist)
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Shoot your shot, they did.
![Twitter avatar for @DrNickA](https://substackcdn.com/image/twitter_name/w_96/DrNickA.jpg)
![Image](https://substackcdn.com/image/fetch/w_600,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFgZfMrvXoAEJepp.jpg)
If the scams don’t get you, the hacks will.
A hacker who stole $117 million in digital assets from decentralized finance exchange Mango Markets now says they'll return the funds, but only if token holders let them keep $70 million without the possibility of criminal prosecution. (bankinfosecurity)
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RBI’s CBDC (pdf) enters the beta-testing phase. (economictimes)
Offline UPI: aka UPI Lite (outlookindia, economictimes)