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FTX crisis feeds the Twitter rumor mill with hot takes and conspiracy theories

Exciting times lead to exciting posts, many of which bring up valid questions, and maybe some less valuable answers.

Events are unfolding fast as the cryptocurrency market is rocked again, this time by FTX. Facts and non-facts are hard to sort out under these conditions, especially since both seem to be depegged from believability at times. “Where’s the money?” and “Who’s to blame?” are popular talking points. Some of the information appearing is indisputably false, or at least highly speculative.

The situation has given rise to the opportunity to tell wild tales, such as this tweet that appeared (and disappeared) on Nov 10:

A very fake tweet, which has since been deleted. Note the username.

Rumors are not always harmless, as became clear when Tether experienced instability due to “evidence” that FTX and Alameda were trying to short the stablecoin. Tether denied having any exposure to Alameda or FTX.

The current status of withdrawals from FTX has also been a source of confusion, possibly because the status of withdrawals remains confusing in real life. FTX is not using “the normal process of queueing withdrawals,” an observer said, and there are a variety of potential causes.

Meanwhile, some FTX employees may not be receiving their salaries:

FTX CEO Sam “SBF” Bankman-Fried warned employees that they might have to wait, according to a leaked FTX internal communication. There is plenty of room for irregularity here, and at least one potential scandal arose, only to be quickly denied:

Bhavnani is the founder of decentralized finance protocol Rari Capital, which was hit by a $10 million hack last year.

In an informational environment of this type, it is tempting to think out loud and in public.

It may be reasonably assumed that the finger-pointing, self-justification and soul-searching has only just started. SBF has apologized profusely and publicly. Meanwhile, newly reelected Minnesota Representative Tom Emmer claimed “reports to my office” indicate SBF and Securities and Exchange Commissioner Gary Gensler were working together to “obtain a regulatory monopoly.”

Galaxy Digital CEO Michael Novogratz probably had a significant insight when he pointed to SBF’s magnetism and fashion sense.

“This is a tale as old as time,” Novogratz said. His company has $77 million of FTX exposure.

3AC liquidators seek time, access to headquarters as Genesis, Algorand ties are untangled

In a court filing in Singapore, 3AC’s liquidators seek to slow down an expected onslaught of suits while they figure out the company’s complex financial dealings.

The liquidators of failed crypto hedge fund Three Arrows Capital (3AC) have filed an application in the High Court of Singapore for a stay on claims against 3AC and access to the company’s Singapore headquarters. The liquidators said in the 1,157-page document that a court decision is needed in light of the number of legal proceedings that may arise in the near future and the “virtual radio silence from the management/directors of the Company.”

According to the July 9 application, the Singapore office may contain cold wallets or information on how to access 3AC trading accounts, which the liquidators want to access before any of it is removed or destroyed. The application lists previous unsuccessful efforts to obtain information from company directors Su Zhu and Kyle Davies and their representatives.

Details of 3AC’s financial woes continue to emerge. According to The Street, 3AC’s biggest creditor, trader Genesis Asia Pacific, a subsidiary of Digital Currency Group, loaned 3AC $2.36 billion.

That is a far greater sum than previously reported. It was already known that the loan had an 80% margin, and Genesis began selling off collateral immediately when 3AC missed a margin call.

Algorand also appeared on the list of 3AC creditors.

The location of Zhu and Davies is currently unknown. Zhu took to Twitter on July 12 to complain that “our good faith to cooperate with the Liquidators was met with baiting.” He may appear at the 3AC creditors’ meeting scheduled for Monday, however, since he is filing a $5 million claim against the company, according to a tweet by DrSoldmanGachs. Zhu is the co-founder and CEO of 3AC.

In addition to Zhu’s claim, 3AC investment manager ThreeAC Limited is making a $25 million claim, DrSoldmanGachs continues in the thread. Kyle Davies’ wife, Kelli Kali Chen, is reportedly seeking a claimed $65.7 million debt in the same filing in the Eastern Caribbean Supreme Court. A court in the British Virgin Islands ordered 3AC into liquidation on June 27.