Ftx United States might soon be pausing a trading availability. As I've said over the last few days, it's time to get out. And while I don't want to encourage a bank run, especially for a company that I've suggested people sign up for in the past I Hate to say it, it's time to go I Don't think anybody saw this one coming. it's quite Sad But Ultimately, we still have time to move, which is good. Withdrawals have actually been reactivated on the international version ftx.com briefly though so far, only about eight million dollars have been able to be withdrawed uh, this so far this morning and Thursday in a one-hour time frame I Think that's relatively low. But in addition to this, Potential Threat coming to FTX Us, which is likely because of the common ownership that you have between Ftx.com the international Wing Nftx.us even though they're different systems and platforms with common ownership and the SEC in White House now watching FTX probably gonna get a shutdown at Ftxus, Ftx.us the US version pretty dang soon. So get ready and personally, uh, get out. This is my opinion. Now what updates do we have on the situation? We've got updates from not only this potential shutdown coming, but we've got updates on Sam Bankman freed some uh comments from him and we also have some insight into how this went so wrong at FTX. so we're going to talk about both of those. Let's go ahead and start with what Sandbankment Free just tweeted and then let's get into how could this get so freaking wrong? After all, Binance pulled out of the deal which we already knew about yesterday. In fact, I was on Yahoo finance just minutes before Binance can the deal and I'm like they should walk. You don't know who owns them. Anyone who's ever tried to sue Binance has ended up giving up on their lawsuit because he can't even figure out who owns these companies. So what's the Fallout here? Well, I Think Binance probably smart from walking away from the F FTX deal. I Think they'll take multi-billion dollar loss trying to bail out FTX That could lead unfortunately though, to more liquidations. We don't know how bad those will get. But if we see large liquidations because of an FTX bankruptcy, that could move over to the US FTX version since they have the international Wing in the U.S version. and then ultimately, if price has got low enough, you could even see I need to say it. But you could see a company like even Binance go under and that's the last leg standing. I mean so what do you think that Binance saw when they looked under the hood at FTX And when you do have so much power Consolidated here. What does that mean for the broader industry? Yeah, I Think what happens is you look at the books of FTX and what you'll probably see is hey, you've got six billion dollars Roughly This is what Bloomberg and some commenters on Bloomberg are estimating. Uh, you've got about six billion dollars that people are trying to withdraw and Binance probably looked and said, well, you've only got one or something like that, right? We're estimating and so Binance has to decide. Do we want to cover that loss? That five billion dollar difference? Is that worth it to us And how many customers are we going to get after that? The big issue though, is if everybody's bailing out and leaving the centralized platforms, then what's the point of bailing out? FTX If you're going to get a shell of a company, so this is probably where it would be a lose-lose situation for Binance to buy them because they take a loss and then not have the customers. But if they don't bail out, FTX We could see liquidations. That could also then in turn hurt Binance if the underlying value of their cryptocurrency these like their Binance token collapses which is possible and then you just don't have centralized cryptocurrency left. Everything's just. you. either have it on a cold wallet or it just becomes worthless. So what's Sam Bankman freed up to right now? Well, here's what he's saying on Twitter First, he shows us this account with like six thousand, three hundred dollars on in it. You know I Don't know if he's trying to flex because he's bankrupt or if he's trying to be relatable. but anyway. uh, he starts off this like 20 Page or 20 post Tweet storm by talking about send which is basically him talking about how much easier they're going to try to make it for international sending of money. Keep in mind they're looking for like a multi-billion dollar bailout to help provide them liquidity. Uh, so they can survive because so he's he's kind of got a prop up and sell FTX even though it's basically bankrupt. So the first few posts he talks about this. then he says take a deep breath now and talk about the future. So talks a little bit about respect including respect for CZ. Uh, and let's hit some of the core posts that actually give us some real interesting insight into what's going on. So first, Sam Bankman Freed says that note Ftx.us and Binance.us two separate companies are not currently impacted by the Ftx.com issues and that's worth noting and something that I just started this video off with as well. But I expect pain to come potentially to both of these platforms if we continue to have liquidity issues in the crypto market. Now the good news is we had thank Goodness soft CPI this morning Consumer Price Index and inflation reads and that's actually propped up Bitcoin A lot I Mean, look at this on the one minute chart. You've got a lot of volatility, but let's go to the one hour chart here. Look at that pain we had yesterday going down to 15.5 bouncing up to almost 18 000 here, getting rejected to 18 000. now sitting at 17 30. as long as BTC can really hold over here this this is going to be critical for liquidity for these other firms though they don't have some of the similar issues that FTX has or had and see this morning: JP Moore Oregon Warned of like a rush of margin calls coming to the crypto industry that are still being fulfilled and those could push BTC down to 13 000 they projected. although of course that projection was made before the CPI numbers came in as far as as soft as they did. so maybe some of that that pain will be alleviated. All right. So now getting to the juicy thread. So here we go. First he says I'm sorry that's the biggest thing I effed up and should have done better I also should have been communicating more recently. uh, that is with more transparency but his hands he says were tied during the duration of a finance deal I mean that's kind of BS because the binance deal wasn't actually happening until you hit crisis level and over the weekend and last week you're like we don't have any liquidity issues. We're fine. Everything's good. All the rumors are fake news and they turned out not to be fake news, right? That's like the opposite of transparency. Then here's the update. this is all about FTX International non-uh us the non on US exchange FTX users in the United States are fine he says I don't buy that as far as I can throw it I would not trust it right now. We could come back in the future maybe. but for right now I'd be out anyway. FTX International Currently has a total market value assets collateral higher than client deposits. Uh, okay. well keep this in mind that FTX International currently has a total market value of assets divided by collateral higher than client deposits you could. This may be true, and this means the company's not insolvent. Insolvent is when you owe more than your company is actually has an asset. So if you have a thousand computers worth 10 million dollars, those are your assets. And if you have debt, uh, debts of 20 million dollars, it means you're insolvent like you're upside down, right? Uh, However, it depends what they're calling assets. What if he's saying well, are intangibles like our brand value are worth 20 billion dollars and that's worth more than all of our collateral. So this is not necessarily liquid assets, right? So that's a little bit of a red flag to me. I Wouldn't trust that I Think it's a sales pitch too. Ironically unsavvy. Venture Capital Investors But okay, full story here is one: I am fleshing out every detail of, but at a very high level I effed up twice the first time. a poor internal labeling of Bank related accounts meant that I was substantially off on my sense of users margin. Okay, first of all, are you like literally the only dude who's sitting at a computer like, oh yes, these are our bank stresses and balances right now. Like, where's the team wait? Like, where are the automatic selling tools for when a collateral Falls and things need to be sold on margin? See, a lot of people at FTX were using uh, we believe the Ftt token as collateral because they were getting yields on Ftt. and then they so they had Ftt parked as collateral. And then what they do is they go borrow money against that Ftt to go buy Bitcoin. So let's say you had 200 of Ftt. Maybe they'd let you buy a hundred dollars of Bitcoin But as Matt Levine put it this morning on Bloomberg, that is the perfect way to set up a death spiral. And it's the stupidest thing to do. Because basically, if people get concerned about the stability of FTX as a brokerage, a crypto brokerage, basically then the value of Ftt goes down because it's kind of like the value of FTX because FTX created the token ftt and FTX promised to buy with profits more Ftt token. So in some way, Ftt token is propped up on how strong FTX is as a company. But the problem with that is if Ftt uh, you know, loses value and then people question the value of FTX, then Ftt goes down even more. And if FT T goes down even more. you start having margin calls on other people's assets which leads people to want to leave. The platform leads to more pain and so what happened? Ftt becomes less valuable, then you start getting a potential Bank Run essentially on FTX. Now FTX becomes more value or becomes less valuable, right? They both lose value, but if FTX becomes less valuable, then so does Ftt. So you have this like stair-stepping death spiral disaster of Ftt gets less valuable when FTX gets less valuable. So if people are using Ftt as collateral and they're getting margin called at FTX you have a crisis of a situation. This is different from what you have with Big Banks Because think about it. if you have uh, you know a two million dollar margin account and let's say you're in on Tesla stock and you're You're out to you know you take two million dollars of margin out in cash. Well let's say and you park that cash somewhere. Your cash doesn't become less valuable because your Tesla stock went down and JP Morgan as an institution doesn't affect the value of your Tesla stock or the value of your dollar whereas Ftt goes down when FTX becomes more risky. and if FDX becomes more risky, Ftt goes down and you stare, step down. It's terrible. That connection is so terrible and that's how you get this debt spiral of a collateralized nightmare. So my sense before zero. X Leverage USD Liquidity Ready to deliver 24 times the average daily withdrawals actual numbers. They only had 80 percent of the needed withdrawals on Sunday and leverage was actually 1.7 x. Which means it's actually a lot for every hundred dollars of of ask that somebody had. people were actually about 70 percent leverage. That's crazy. And so of course, when it rains, it pours. We saw roughly five billion dollars of withdrawals on Sunday. That's a pretty good estimate because Bloomberg yesterday was estimating 6 billion five. That's pretty dang close. So I was off twice, which tells me a lot of things, but specifically and generally that I was bad at and the third time I'm not communicating enough Well, yeah, that's that's obvious anyway. So then he apologizes and says, we're human Says that right now the priority is due, right by users, which some people are like. so are you gonna make people whole? But he probably can't because he's bankrupt. As some people say, you know, no guarantee. So that's just an opinion. So right now we're spending the week doing everything we can to raise liquidity. I Can't make any promises about that, but I'm going to try and give anything I have that'll make it work. There are a number of players we're in talks with, letters of intents and sheets. We'll see how it ends up. Basically, he's asking everybody in the world like, hey, we'll give you equity in FTX if you could just bail us out. Basically, right at the end of the day, I was the CEO That means I was responsible and he failed. So what does that mean going forward I Have no idea. Also, we're basically closing down Alameda research because it's worthless anyway and we screwed up. And in any scenario in which FTX continues operating, its first priority will be radical transparency. Well, which kind of should have been done in the first place, which you think it would be in blockchain? It's kind of weird that he's talking about these like transparency issues when technically everything's on the blockchain, right? So it's like, you know, Ikea It's like we're in these situations where you know blockchain's transparent, but then something crazy happens and then it's like, well, I guess it wasn't that obvious. Yeah, uh. so there's definitely a lot of cleanup to do here and I think regulation is really going to help here. Some other comments: Uh, this is all about FTX International the U.S based exchange which accepts Americans is not financially impacted. It's 100 liquid. Dude, we've heard this a million times before. Okay, this is what what Bear Stearns told us too. So uh and then he gives some kind of generic disclaimer here and uh yeah, that's the latest update with an apology that we have from Sam Bankman Free. So uh and again, remember, look at this: Sam Bankman Free Did tweet this on the weekend. A competitor is trying to go after us with false rumors FTX is fine, assets are fine, details right. And then we have that tweet actually being deleted one day later. Ah, so okay, where do we stand? Well, where we stand is. uh, the FTX token because of Bitcoin's rally is actually up. and because there is some hope that some withdrawals are returning, the FTX token is actually up. Uh, it's a marginally. it's up about two percent. at the moment. it's still only at 3.63 So I mean I guess up is relative when you're down like you know, a lot. Uh, remember this was trading for about 50 bucks earlier in the year. over here in April trading for three dollars now. So if you do three 3.66 divided by 50 bucks, you're down 92.68 That's not exactly the best performance here. and and uh, you know you're down from uh uh, you know, 366 from 26 bucks. Just a bit ago, you're down like 86. So sure the fluctuations on this are going to be wild. In fact, the fact that it just went from plus two percent to plus six percent and implies the liquidity here is very, very thin. When the order books are thin, you get very, very quick movements in either directions. All right. So big. Bottom line: Out of all of this, there are other brokerages who don't use their own token for collateral like Banks Don't do that I Don't believe Binance does that. so that is a benefit to Binance. Uh I don't believe Coinbase does that. So I think that that's a benefit to coinbase I Do think that the liquidity crisis we are seeing is going to take probably a few weeks to play out and it could lead to some other shoes to drop. So I do think there's still downside potential for cryptos. However, they are going to be propped up with the rising tide of the stock market moving up very nicely because of what could potentially be Peak inflation. This means a lot of the stress on the crypto Market could actually settle down and calm down. and the way to play this in my opinion is uh, maybe if you're thinking about hey, when should I get back into crypto? My thought is well, certainly after you get your 60 off on the amazing courses on building your wealth link down below including the entrepreneurial new course Elite Hustlers University and the zero to millionaire real estate course or the stocks course or the other ones. But I would probably wait until after the next CPI report because I think that's the game changer if December 13th reiterates low in Peak inflation. Perfect. Maybe and then we have stability by then maybe it's safe to go back in. if uh, you know you know we get bad CPI uh in uh December then I probably would wait to see what other things crack. So anyway, these are my thoughts. Thank you so much for watching this video. Consider subscribing and we'll see in the next one. Goodbye.