Reader, it’s only monday but we’ve been working all weekend long following the craziest week crypto has ever had.

Normally we here at Coffee & Crypto bring you the day’s major crypto headlines and do a deep dive on one topic, but today we’re going to throw all of that out.

Because at the moment, there is only one story that matters: it’s the story of how one company brought down an entire industry.

Spilling the Beans

Here is the story of Sam Bankman-Fried, FTX, and the week that changed crypto forever...

People have gone back and forth all weekend long on who Sam Bankman-Fried was and wasn’t. Was he a genius? A sociopath? Some dude who fooled an industry?

But let’s simplify this a bit - and maybe even give him the benefit of the doubt. Sam Bankman-Fried, the son of two Stanford Law professors, was a very strange, very brilliant kid.

Turning 30 just this year, Bankman-Fried quickly showed himself to be a trading prodigy at Jane Street Capital. He soon found success and quit his job at Jane Street to set out alone.

Sam had discovered an interesting quirk about Bitcoin: it traded at wildly different prices around the globe. So he figured, if he could buy it low in one country, he could sell it higher somewhere else.

And so Sam launched Alameda Research in 2017. He was 25 years old and, like any other suddenly, stupidly rich young person - created his own tech-nerd Entourage in a Bahamas mansion with 10 of his closet friends.

On a personal level, Sam was… quirky. A vegan and self-proclaimed altruist, Sam had a close-knit circle of friends, he was tight with his family, and he seemed to all the world to be crypto’s “golden boy.”

In 2018, Sam Bankman-Fried approached Binance’s CEO, Changpeng Zhao for an investment in what would soon become FTX - a new crypto exchange.

But from the jump, FTX and Alameda research were always inextricably linked, funding each other in an endless loop - opaque to nearly everyone but those at the very top.

In hindsight, FTX had all the features of a classic Ponzi scheme. No transparency, a cult of personality, and a shiny star-studded exterior.

And that exterior lasted.

So we fast-forward a few years and Sam Bankman-Fried becomes the knight in shining armor of the crypto bear market. He starts buying up struggling projects as the rest of the world looks on at his remarkably stable company.

And then all of a sudden, just last week, Binance called B.S. and the house of cards came tumbling down.

But knowing what we know now, it’s hard to imagine this ending any other way. FTX was little more than a piggy bank from which Sam withdrew and spent at his whim.

And now that they’ve been caught, as if in some twisted version of a Smashmouth song, the lies keep comin’ and they won’t stop comin’.

It all started with Bankman-Fried’s initial lie, when Binance’s Changpeng Zhao suggested that his FTT token was unstable, Bankman-Fried tweeted out:

“FTX is fine, Assets are fine.”

And it was all downhill from there.

https://twitter.com/coffeebreak_YT/status/1591864859037401088/photo/2

Alameda Research, owned by Bankman-Fried, was trading millions if not billions of dollars from FTX accounts without the account holders’ permission or knowledge.

And amid their own wild misuse of funds, FTX was suddenly hacked for $600 million on Friday night. “Who ate these cookies!?” FTX asked, with chocolate still smeared on their faces.

And FTX even faked an order from Bahama regulators, so that they could conduct a shady withdrawal of funds despite the freeze on their company.

FTX had tweeted: “Per our Bahamian HQ’s regulation and regulators, we have begun to facilitate withdrawals of Bahamian funds. As such, you may have seen some withdrawals processed by FTX recently as we complied with the regulators.”

And then the Bahamian government responded: “The commission wishes to advise that it has not directed, authorized or suggested to FTX Digital Markets Ltd. the prioritization of withdrawals for Bahamian clients.”

Ultimately, this move was just another ploy for FTX to prioritize its founders over their customers.

With all of this dirty laundry emerging, it’s becoming clear that the community can’t trust what Bankman-Fried says.

It’s all ripe for conspiracy theories, as speculators wonder if Bankman-Fried is going to hightail it to Argentina, Dubai, or some nation with tricky extradition laws.

So, what’s the call? Is Sam Bankman-Fried a fallen hero or a willful villain? Is he Darth Vader? Or his he a tacky, confused Luke Skywalker?

The question that the community and the Justice Department have been asking is: Did Bankman-Fried deliberately deceive investors or was he simply incompetent?

So let us ask: bave you seen The Office? The British or the American version, doesn’t matter. In both of those series, the Micheal Scott/David Brent character is a talented salesman who is promoted to a managerial role with comically disastrous results.

Let’s assume this applies to Sam Bankman-Fried. A gifted daytrader and technical genius, when pushed into a managerial role, he flopped. It’s one thing to be in charge of millions of dollars, it’s another thing to be in charge of people’s lives.

Was it malicious? Maybe? But also maybe not. The guy’s a vegan who gave millions to charity, but let’s be honest: we can never really know what’s going on in someone’s head.

But if we were to guess? What if this is just a case of the pressures of leadership leading to a series of increasingly poor decisions.

We know that SBF and the FTX saga have been the focus of our newsletter the past week, but it seems that this developing story may have, well, developed.

Though admittedly, it kind of feels like we’re deep in the third act of a horror movie and even though it seems like the killer is defeated, there’s still time for one last jump scare.

And even if FTX tries to scare you, we’ll be there to hold you and cover your eyes (or more likely just report on the story.)

Meme of the Day

Phew, that was close. 😅

The Last Sip

If this is your first newsletter, this isn’t how things normally look. We usually have a wider array of headlines and more jokes. A lot more jokes. So many jokes that you’d be concerned that something in our brains had cracked.

That being said, a lot of people lost a lot of money. It felt kinda stupid to talk about anything else.

This is crypto’s Enron moment and we can’t not talk about it.

After this week, Crypto will have a new-normal and so will we.

But don’t worry reader, we’ll be there with you, chewing coffee beans and spitting truths every step of the way.

Until then, stay Caffeinated,

Coffee & Crypto Team

Thanks so much for reading Coffee & Crypto!

If you find yourself smiling at any of our dumb jokes, or even *learning* something - make sure to share this newsletter with your friends!

If you get 10 friends to sign up - or even enemies, we don't care - we'll send you a swag box with some epic Coffee & Crypto merch! Just hit the Click to Share button in the section below to get started!

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.