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About: Investoom Weekly is the newsletter by the market intelligence company Investoom that provides AI-powered investment insights through social sentiment data, onchain data and financial data. Investoom democratizes the access to hedge fund insights.

Overview of the topics

• Crypto Highlights: On Friday night, at around 9:45 p.m. hundreds of millions of dollars flew out of FTX wallets.
• Onchain Data: The hacker that last week drained $477 million from the exchange converted a large portion of tokens into ETH.
• Social Data: After the collapse of FTX, Bitcoin has reached $16,000, its lowest level since the beginning of the year.
• Financial Data: FTX has valued its assets between $10 billion to $50 billion, with a similar estimate for its liabilities.
• Deep Dive: The bankruptcy filings have revealed that FTX founder Bankman-Fried was loaned $1 billion from Alameda Research.

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Crypto Highlights

FTX hacker drains exchange wallets

On Friday night, at around 9:45 p.m. hundreds of millions of dollars flew out of FTX wallets. An hour later, the crypto sleuth ZachXBT pointed out that the transactions were encoded with playful messages like “Rug Pull All”, an operation where developers abandon a project and run away with investors' money. FTX employees didn’t recognize the transfers, slightly more than $338 million at the time of the investigation.

When the amount reached $600 million, an FTX Telegram channel admin told the users that “FTX has been hacked” and suggested to “not go on FTX site as it might download Trojans”, referring to a particular kind of malware. From Monday, users reported that they could no longer log in because their browsers displayed only a Cloudflare error.

However, on Monday evening, the general counsel of FTX US Ryne Miller announced that according to the firms’ Chapter 11 bankruptcy filings, FTX had put in place precautionary steps to transfer $186 million in digital assets to cold storage. Indeed, the process has been sped up after the hacker’s attack.

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Onchain Data

From NFT hacker to Ethereum whale

The hacker that last week drained a total of $477 million from the exchange has converted a large portion of tokens into Ethereum. Over the past few days, he managed several swaps and cross-chain transactions, leading its current holdings to $338 million.

Included in his balance sheet are 228,523 ETH, worth $286 million at the current market price. What is the consequence? The account used for the operations, named “FTX Accounts Drainer”, has become the 35th largest Ethereum holder in terms of the number of tokens held.

With more than 15 million tokens, the top ETH holder is the Beacon Chain deposit contract, which allows users to transfer funds from the Ethereum Proof-of-Work to the Beacon Chain. The others are represented by crypto exchanges, decentralized finance bridges, that connect blockchains, and layer-2 protocols, which are specific sets of ETH scaling solutions.

Currently, the main 20 Ethereum wallets represent less than 28% of the ETH circulating supply, whereas the main 50 reach 33% of all ETH tokens.

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Social Data

Over $1.5 billion in BTC withdrawals in a week

The bankruptcy of FTX put the crypto market in a state of extreme fear, with the two leading assets of the industry Bitcoin and Ethereum falling to their lowest levels of the year at $16,000 and $1.200.

After the collapse of FTX, crypto users withdrew over $3 billion in digital assets in the last week. Indeed, as regulators investigate the actions of the exchange, investors have pulled out from their wallets $1.5 billion in Bitcoin. The major weekly reductions regarded the crypto exchange Gemini, down 30,000 BTC, followed by Kraken, Binance and Coinbase.

While the ex-CEO of FTX, Sam Bankman-Fried, is being extradited to the US from the Bahamas, expectations on the crypto market continue to fall. “The collapse of FTX has posed tremendous harm to over one million users, many of whom are everyday people who invested their savings in the FTX cryptocurrency exchange, to watch them disappear in a matter of seconds” pointed out the Chair of the US House Financial Services Committee Maxine Waters.

Among the most popular words used by crypto investors on Twitter, “FTX” peaks with 400 mentions per day. However, users have also talked about “Alameda Research”, the quantitative trading firm that Sam Bankman-Fried founded in 2017. Apart from accumulating $60 million FTX tokens before the listings on the exchange were made public, its CEO, known as Caroline Ellison, declared to have made “regular amphetamine use” and is suspected to be the ex-girlfriend of Bankman-Fried.

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Financial Data

FTX assets should be in between $1oB to $50B

The new CEO of the trading firm FTX, John Ray III, has reported that he has never seen such a “complete failure” of corporate control. In a filing with the US bankruptcy court for the district of Delaware, he said that there was a “complete absence of trustworthy financial information.”

John Ray noticed that the companies belonging to the FTX Group, and in particular those based in the Bahamas and Antigua, didn’t have a proper corporate governance system. Indeed, many never had Board meetings. Moreover, the group was also affected by cash management procedural failures and a lack of attention to the creditworthiness of banking partners.

Up to now, debtors have secured “only a fraction” of the digital tokens held by FTX. Currently, there are $740 million of crypto secured in cold wallets, which are a way of holding crypto offline. Why FTX is protecting assets with cold wallets? By using such a shield, investors can prevent possible hackers to access their holdings. The company has valued its assets between $10 billion to $50 billion, with a similar estimate for its liabilities.

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Community

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News of the week

• BTC: World’s biggest crypto fund hits record 42% discount to value of Bitcoin it holds. [Read more]
• ETH: Ethereum software firm ConsenSys co-launches Ethereum climate platform. [Read more]
• Twitter: Is Twitter nearly over? Some users are acticng like it is. [Read more]
• Regulation: Aussie treasurer promises crypto regulation next year amid FTX debacle. [Read more]

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About

Investoom is a Munich-based Fintech Startup democratizing the access to quantitative investment insights that are used by big hedge funds, but are inaccessible to retail investors. We are a market intelligence company that provides AI-powered investment insights through social sentiment data, onchain data and financial data.

Disclaimer: The Investoom newsletter is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions. [Read more].