MCS Crypto News - Issue #8

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Hi everyone. If you’re as depressed as I am about the Chicago bears, you could use some good news. Luckily, we’re here to warm your hearts - and your crypto portfolios.

Let’s start with a criminal (hopefully) getting what he deserves.

💥The Fall of FTX💥

FTX, once a leading cryptocurrency exchange with a staggering $32 billion valuation, faced a rapid and tumultuous collapse in late 2022.

Here's a breakdown of the events that led to its downfall and the subsequent legal challenges faced by its founder and former CEO, Sam Bankman-Fried (SBF):

It all started with a CoinDesk Report in November 2022 that unveiled potential leverage and solvency issues tied to FTX's affiliated trading firm, Alameda Research. This report disclosed Alameda's significant position in FTT, FTX's native token, raising alarms about undisclosed leverage and solvency.

Here’s what FTX an Alameda Research did:

• Creation: FTX made their own cryptocurrency, called FTT.

• Inflation: They artificially boosted its value, making it seem more valuable than it truly was.

• Borrowing: Using this inflated value, FTX and Alameda Research borrowed massive amounts of money against FTT.

• Collapse: Unfortunately, they couldn't manage the funds properly and lost all the money.

In simple terms, FTX and SBF tried to play a high-stakes financial game, and when things didn't go as planned, everything came crashing down.

The aftermath of the The aftermath Coindesk Report was swift and severe. Here’s how the empire collapsed:

• Liquidity Crisis: FTX grappled with a liquidity crunch, with customers demanding a staggering $6 billion in withdrawals.

• Binance Bailout Attempt: In a desperate bid for survival, FTX sought a bailout from rival exchange Binance. However, after initial discussions, Binance backed out.

• Bankruptcy Filing: By November 11, 2022, the situation had deteriorated to the point where FTX filed for bankruptcy.

• Alleged Hack: To add to the woes, FTX reported a potential hack, with an estimated $477 million worth of tokens stolen.

Tomorrow, the trial for FTX CEO and head fraudster Sam Bankman Fried, will begin.

🔍 Key Developments So Far 🔍

• No Temporary Release: A federal judge has ruled that SBF will remain in jail for the entirety of his trial, denying multiple requests for his temporary release.

• Defense Strategy Limited: The defense's "advice of counsel" argument, which would have allowed SBF to shift blame onto FTX company lawyers for decisions made during his tenure, has been blocked from the opening statements.

• Political Engagements: A startling revelation from author Michael Lewis's new book indicates that SBF considered offering Donald Trump $5 billion to deter him from running for office in 2024.

📈 The Bigger Picture 📈

• Legal Battles: The defense's strategy has faced multiple setbacks, including a restriction on accessing certain documents crucial for the "advice of counsel" defense.

• Political Donations: Before FTX's collapse, SBF was a significant political donor, contributing over $70 million to both Republican and Democratic campaigns. He ranked as the second-largest donor to Democrats, only behind George Soros.

🚀 Implications & Future Outlook 🚀

• Charges and Allegations: SBF faces multiple charges, including conspiracy, fraud, and violations of campaign finance laws.

• FTX's Current Stance: Under its new leadership, FTX has been attempting to reclaim the donations made by SBF and other executives.

• Public Perception: The trial, combined with the revelations about SBF's political engagements, has significantly impacted the public's perception of the former crypto mogul.

It’s crystal clear to anyone in the crypto industry that this man knew exactly what he was doing. He knowingly defrauded investors and has shown no remorse. Let’s hope that the court will deliver justice and put him where he belongs - prison.

Happy “Uptober” to you! I hope you have your crypto bags packed.

🔍 Key Market Movements 🔍

• Bitcoin's Bullish Run: Bitcoin has surged past the $28,000 mark, a significant milestone after a period of stagnation. This rise is attributed to a mix of ETF optimism and historical trends favoring Bitcoin in October.

• Short Squeeze Scenario: Approximately $94 million in short positions were liquidated in a short span, indicating a potential short squeeze. This phenomenon, where short sellers rush to cover their positions, has amplified the bullish sentiment.

• Altcoins in Action: Ethereum (ETH) has crossed the $1,700 mark, with Solana (SOL) registering a notable 13.5% overnight increase. Other tokens, including Thorchain (RUNE) and Render (RNDR), have also witnessed significant gains.

📈 Behind the Scenes 📈

• Historical "Uptober" Trend: Historically, Bitcoin has seen positive gains in October, a trend that seems to be holding true this year as well. Here are $BTC returns for the month of October over the past 10 years:

• Macro Influences: The U.S. government's move to prevent a shutdown by extending its funding has likely contributed to the positive sentiment in the global markets. Additionally, the buzz around a potential Ethereum ETF by VanEck is adding to the upbeat mood.

🚀 What Lies Ahead 🚀

• Market Predictions: With Bitcoin's strong start to the month, analysts are watching closely to see if this upward trajectory continues, potentially setting the stage for further gains in the crypto market.

• Regulatory Landscape: As the crypto market surges, regulatory bodies worldwide will be keeping a close eye, potentially introducing new guidelines or clarifications that could influence market dynamics.

Pendle breaks its all time high in Total Value Locked.

Weekly token narrative with Miles Deutscher:

Injective partners with Google Cloud.

Chainlink unveils universal gas.

Babylon unveils Bitcoin Staking Protocol for The Cosmos Ecosystem.

Grayscale submits an application to convert its ETH trust to a Spot ETF.

That’s all for today. We’ll be back tomorrow with MCS Crypto 101 - Issue #9.

Thank you so much for subscribing to Make Crypto Simple.

Chris Schawel


^{The content provided in this newsletter is for entertainment purposes only and should not be construed as financial advice. All information, including but not limited to market analysis, price predictions, and investment strategies, is purely speculative in nature. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. We are not responsible for any losses incurred as a result of the information presented in this newsletter.}