Michael Burry is bullish on gold as the crypto industry continues to suffer from the FTX crash.
Michael Burry, the fund manager and investor who became popular from the “The Big Short” movie, believes gold will shine as investors seek safety from crypto risks due to the catastrophic collapse of Sam Bankman-Fried’s FTX.
Burry is notoriously famous for shorting the U.S. housing market and profiting from the 2008 financial crisis. He also netted millions from investing in GameStop in 2019 before the Reddit frenzy and meme stock season in January 2021.
Big Short Investor: Time for Gold
The fund manager shared his thoughts on gold in a tweet that has now been deleted. According to Burry, Gold’s time will come as the crypto market continues to suffer from the contagion caused by FTX’s downfall.
“Long thought that the time for gold would be when crypto scandals merge into contagion,” the fund manager said.
Recall that crypto exchange FTX came crashing down last week after allegedly mismanaging users’ funds for years. The company soon ran into liquidity issues and was unable to process withdrawals. FTX and more than 130 affiliated companies have filed for voluntary Chapter 11 and 15 bankruptcy protection, with estimated liabilities between $11 billion and $16 billion.
FTX’s downfall sent another wave of liquidity crunch across the crypto industry as numerous entities, including Genesis, BlockFi, Galaxy Digital, and Canada’s Ontario Teachers Pension Plan (OTPP), had financial exposure to the exchange before it went bankrupt.
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Meanwhile, gold rallied 8% this month after consecutive losses in the last seven months. According to analysts, investors are bullish on the precious metal due to cooling inflation and crypto risks, among other reasons.
The Mother of All Crashes in Crypto
Burry’s latest comments come more than a year after he warned about the “mother of all crashes” in crypto. During the bull run last year, the fund manager cautioned that all hype and speculation do is draw in retail investors before the mother of all crashes.
“When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries. History ain’t changed,” he said.
The investor further noted that leverage is crypto’s biggest problem, and those who do not know how much leverage there is in the crypto market have more to learn about crypto.
Prior to the fall of FTX, Ethereum’s shift to proof-of-stake was all the rage in crypto circles. Two months removed from The Merge, Ethereum is still playing catch-up with more mature staking networks like Cosmos and Polkadot, but Kraken’s Tim Ogilvie thinks that’s about to change.
Ogilvie, Kraken’s Head of Staked, told The Block in an interview, adding that a big transition will be seen as “a huge number of assets are likely to get staked over the course of the next six to nine months.”. Ogilvie started Staked at Kraken five years ago, a number of questions about staking remained unanswered in terms of security and whether the mechanism would work.
Mr. Wonderful would still hire Bankman-Fried on his team if the ex-CEO was relegated to a strict crypto trading role.
The Canadian businessman and Shark Tank star Kevin O’Leary still believes Sam Bankman Fried’s future businesses could be worth investing in, despite losing money on FTX.
O’Leary recently outlined the extent of his exposure to the exchange while arguing that there’s a “silver lining” in the company’s collapse.
Mr. Wonderful’s Thoughts on FTX
In an interview on Tuesday, Mr. Wonderful admitted that FTX was one of his “bad investments” but remains safe due to his diversification of assets.
Nevertheless, the investor took a “huge hit.” He said he was a shareholder of FTX and FTX US and held multiple accounts with the exchange that are now frozen.
“I’ve talked to many other institutional investors that use the platform – they also have zero balances,” he added. “Everybody’s talking to their accountants and lawyers, and auditors, and compliance departments about this. It’s an extraordinary situation.”
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O’Leary was previously a spokesperson for FTX. Last month, he suggested that the exchange was the last place he’d expect to “get in trouble.” He’d also predicted in June that crypto would likely see its bottom once a “big player” was wiped out – which he now believes was FTX.
As another silver lining, O’Leary said the exchange’s blowup is pressuring regulators to provide clearer industry guidelines going forwards. For example, key pieces of crypto legislation – such as the Digital Commodity Act – are getting new focus after remaining stagnant in congress.
How Will O’Leary Store His Funds?
In the meantime, the investor plans to remove all of his assets from unregulated exchanges and move them to a regulated Canadian exchange called Bitbuy. The company is regulated by the Ontario Securities Commission (OSC) and is legally barred from co-mingling user funds in the way FTX is suspected of doing.
O’Leary explained that cold storage custody of assets isn’t an option for firms mandated to limit their crypto exposure to a certain percentage of their net worth. As such, assets must be available to trade at all times, so he can sell certain assets to remain within their “diversified mandate.”
“You are going to see billions of dollars leave unregulated and exchanges looking for somewhere in the world where they can be put safely. That, right now, is Canada.”
Unlike the United States, Canada was the first country in the world to approve a Bitcoin Spot ETF, which accurately tracks the spot price of Bitcoin. It has since approved Bitcoin, and Ethereum mixed ETFs as well.
Still an SBF Supporter
Even after his losses, Mr. Wonderful maintains that FTX’s former CEO, Sam Bankman-Fried, doesn’t have an “evil bone in his body.”
“You can love him or hate him given what’s happened, but I think we can all admit he was one of the most brilliant traders in the crypto universe,” he said.
When asked if he would back Bankman-Fried in a hypothetical new crypto venture, O’Leary said he would as long as the former billionaire had only “trading control” of assets, unlike “operational control.” Overall he maintained that the crypto tycoon is an “unusual one percent person” in understanding how digital assets work.
The story of SBF could inspire directors to produce a movie called “The King of Crypto,” Saylor opined.
The Executive Chairman of MicroStrategy and prominent bitcoin bull – Michael Saylor – likened the CEO of FTX – Sam Bankman-Fried – to the notorious Jordan Belfort, also known as “The Wolf of Wall Street.”
In his view, SBF “was using stolen money” and cooperated with corrupt regulators to keep his business going.
Make a Movie About Him
Bitcoin evangelist Michael Saylor believes Bankman-Fried lobbied against “all of the virtues of the industry,” including bitcoin, by using counterfeit finances and bribing certain individuals.
MicroStrategy’s Co-Founder went further, describing FTX’s CEO as “The Wolf of Wall Street” of the crypto sector. Hollywood should focus on him and produce a film called “The King of Crypto,” Saylor added:
“I think this [crypto] crash accelerates regulatory intervention. I mean, in fact, in a sense, SBF is like the Jordan Belfort of the crypto era. Instead of ‘The Wolf of Wall Street,’ they’ll make a movie called ‘The King of Crypto.'”
Jordan Belfort, a.k.a “The Wolf of Wall Street,” is a former trader who pleaded guilty to crimes related to stock market manipulation at the end of last century. His offenses led to a two-year prison sentence, while after his release, he started traveling the world working as a motivational speaker.
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Belfort received additional popularity in 2013 when Leonardo DiCaprio played the “Wolf of Wall Street” in the eponymous film directed by Martin Scorsese.
The crypto community is yet to see how the situation around Sam Bankman-Fried will evolve.
SBF in the Spotlight
The crash of the US-based crypto exchange FTX created a mountain of negativism toward its former CEO.
The world’s richest man Elon Musk was among the critics, saying he was not left with a good opinion on SBF after they discussed the Twitter deal a few weeks ago:
“I got a ton of people telling he’s got huge amounts of money that he wants to invest in the Twitter deal, and I talked to him for about half an hour, and I know my bullshit meter was redlining. It was like, this dude is bullshit – that was my impression.”
The former CEO of Kraken – Jesse Powell – also criticized Bankman-Fried, claiming the latter was inking multi-million sports deals only to nurture his ego. SBF was also buying political favor and donated a significant amount of funds to the Democratic Party so he could emerge as a “media darling,” Powell added
Aside from losses resulting from theFTXhack, the bankrupt exchange is apparently unable to account for $1 billion to $2 billion of client funds, say people familiar with the matter, and itsbalance sheet shows liabilities of $8,859 millionagainst assets of just $899 million.
FTX balance sheets shown to investors by Sam Bankman-Fried
In addition, $10 billion was transferred to sister company Alameda Research and, perhaps most damagingly from a legal perspective, FTX insiders created a “back door” to its accounting systems, according to Reuters reports.
A back door to bypass oversight requirements opens the FTX leadership to charges that they were trying to shield their nefarious activities from the rest of the groups employees.
At least $600 billion lost in hack – and what is balance sheet itemization TRUMPLOSE and other anomalies
So far it is estimated that the $600 million may have been drained from wallets in what was either a hack or nefarious behaviour by insiders.
The sketchy balance sheet shown above includes a number of large “less liquid” and illiquid entries, such as $2.1 billion worth of Serum (SRM) tokens, which when marked to market will be worth much less than the book entry indicates.
There are other strange entries, such as "Anthropic" $500 million; "TWTR" $43.2 million and "TRUMPLOSE" $7.3 million.
TWTR is of course the ticker for Twitter, but it is sitting in the illiquid part of the ledger, which is strange as even though Twitter is now a private company, as a shareholder when it was public, if an FTX entity was a shareholder, FTX should have received $54.20 a share for its stock holding.
As the FTX disaster unfolds, crypto prices remain weak. Bitcoin is off 2% today at $16,565.
FTX crypto operation "run by a gang of kids in the Bahamas"
But as reports emerge about how the close knit executive team lived and worked together – some of them in off and on relationships – the multiplying fears about the way FTX was run are mounting.
A nexus of former Jane Street traders is at the centre of the running of the company out of a Bahamas mansion, where many of the executive live, according to a story on Fortune citing its own and Coindesk reporting.
Damningly, one person in the know said of FTX: “The whole operation was run by a gang of kids in the Bahamas".
There are nine people who are though to live together in the luxury dwelling alongside FTX former CEO Sam Bankman-Fried.
SBF breaking ground for the Bahamas HQ
Among them are Alameda Research CEO Caroline Ellison, FTX co-founder and chief technology officer Gary Wang and FTX Director of Engineering Nishad Singh. According to Fortune the other six are all FTX employees.
“Gary, Nishad and Sam control the code, the exchange’s matching engine and funds,” the first person familiar with the matter said. “If they moved them around or input their own numbers, I’m not sure who would notice.”
Another person said to be familiar with how the company operated claimed: “They’ll do anything for each other.”
Also, Wang, Nishad and Bankman-Fried were the sole board members of the philanthropic arm of the sprawling FTX empire, the FTX Foundation.
Bankman-Fried is a graduate of MIT, as is Gary Wang.
The FTX and Alameda offices are situated next to each other in a compound that they share with various crypto incubator projects.
These internecine relationships made FTX, allegedly, a nest of conflicting interests and oversight nightmares.
Where in the world is Sam Bankman-Fried?
Rumors are now circulating on social media that Sam Bankman-Fried and other members of the top team were on a private jet flight from the Bahamas to Argentina at 01:45 EST on Saturday morning.
The Gulfstream private jet registration is LVKEB and is thought to be an FTX property.
Yesterday, the Gulfstream's journey was the most tracked flight in the world.
However, SBF has since communicated with Reuters via text and he is reported to have replied “Nope” when asked if he was in Argentina, apparently confirming that he was still in the Bahamas.
Cryptonews has also reached to SBF, on Telegram, but by press time had not received a reply.
But on the official FTX Telegram a pinned message from an admin named Jack says they have no idea where SBF is – in other words they are not corroborating the statement the former CEO made to Reuters in which he claims to still be on the Caribbean island of the Bahamas.
Speaking at a conference in Indonesia on Saturday, Binance CEO Changpeng Zhao (CZ) thinks that the FTX collapse has severely damaged the crypto space, setting it back years.
Critics of CZ might argue that he should have thought of that before he triggered what was in effect a bank run on FTX.
“I think basically we’ve been set back a few years now. Regulators rightfully will scrutinise this industry much, much harder, which is probably a good thing to be honest.” said CZ
Solana, which has, up until now, had a close relationship with FTX, is seeing selling pressure in its SOL token continue to increase, down another 7% today to $13.98.
The extreme bearishness has spread to wrapped BTC on the Solana chain, which is down 76% in an ominous sign for those involved in the coin ecosystem.
FTX victims are starting to take proactive action by preparing for a law suit.
Group called FTX CLASS ACTION LAWSUIT (CHAT) with 50-plus members already exists and is growing fast, as some worry that the official telegram could be closed and therefore want to organise independently of the filled exchanges’ outlets.
Group founder AJ told Cryptonews that they haven't hired a lawyer yet but "should be done with that in a couple of days".
In a further illustration of the weak processes that are in place on some exchanges, it has just emerged that crypto.com accidentally sent 320k ETH in customer funds to Gate.io, which gate.io promptly returned – as shown in gate.io proof of reserves.
And there are also doubts being raised in some quarters about the veracity of some of the proof of reserves (PORs) reports that are being published by centralised exchanges. Mario Nawfal, CEO or IBCGroup.io is not impressed by the PORs from Gate and Huobi
In other news, Binance has passed FTT deposits after noticing “suspicious movement of a large amount of FTT”.
The FXT Token (FTT) price continues its seemingly unstoppable descent to $0:
Providing some advice for crypto market participants, CZ tweeted in the past hour or so “@TrustWallet your keys, your coins”, in a reference to the Binance self-custody wallet and the mantra for crypto safety.
Those self-custody lessons seem to have been overlooked by many in recent times, as exchanges appeared to have become safer places to trade and to be trusted with custody of assets.
The Trust Wallet Token (TWT) is up 63% today at $2.02:
Crypto is not all gloom, providing you know where to look – checkout these 2 new tokens
One such area is in presale tokens, which can offer a haven at times like this – providing you pick the right ones.
Two presale tokens catch the eye today – Dash 2 Trade (D2T) and RobotEra (TORA).
Dash 2 Trade is building an analytics and signals trading platform with a state-of-the-art dashboard, featuring, unique presale scoring system, social sentiment analysis and social trading, auto-trading and backtesting.
In a vote of confidence in the project, LBank and, most recently, BitMart has both signed deals to list the token after its presale ends.
RobotEra could be the next hot metaverse gaming project and is akin to The Sandbox. Checkout the video for more info on this 30x opportunity. RobotEra is backed by Kucoin exchange and Polygon Studios.
Vitalik Buterin has shared some thoughts on SBF and the way the community has reacted to the whole fiasco so far.
The co-founder of Ethereum has shared some thoughts on the FTX fallout and, more precisely, on the reaction toward the former CEO – Sam Bankman-Fried.
It appears that the cryptocurrency community is unanimous in its stance against the action of Sam Bankman-Fried, the former CEO of FTX.
The overwhelming majority of reactions are entirely negative, with many calling for prison time and the most severe regulatory punishments.
Vitalik Buterin, the founder of Ethereum, has also chipped in on the matter.
He believes that, as a public figure, SBF deserves everything he’s getting. He even said this is healthy in a bid to reaffirm important values for the community.
On the other hand, though, “Sam the human being” deserves support and love, according to Buterin.
SBF the public figure deserves what it’s getting and it’s even healthy to have a good dunking session to reaffirm important community values.
Sam the human being deserves love, and I hope he has friends and family that can give it to him.
Most of the commentators disagreed with Buterin, arguing that SBF was acting fraudulently and with malice until the very end, even after that.
Before resigning as CEO, he reassured users that the US-based arm of FTX was completely liquid and that it was not caught up in the mess. A day later, it filed for bankruptcy.
In what seems to be a repeated mistake, CryptoCom has once again sent money accidentally, only to recover it later.
FTX’s collapse stirred the cryptocurrency market in a way that not many expected, but there’s some silver lining, however tiny it may seem.
For once, most of the leading exchanges decided to go ahead with their proof-of-reserves and published the majority of their addresses that contained the funds stored on their platforms.
CryptoCom is one of the exchanges that published their addresses, showcasing how much and what cryptocurrencies it stores on behalf of its customers.
However, quickly after the information went public, members of the crypto community discovered a transaction for a whopping 320,000 ETH sent out from one of the exchange’s addresses.
This represented roughly 80% of the ETH stored on CryptoCom.
The company’s CEO, Kris Marszalek, gave an explanation of what happened:
It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address. We worked with Gate team and the funds were subsequently returned to our cold storage. New process and features were implemented to prevent this from reoccurring.
Despite the explanation, the community is left with a sour taste as to how it is possible to accidentally send a whopping $400 million worth of ETH to an address that was not the designated receiver.
This is not the first time CryptoCom makes a mistake of this kind.
Last year, the exchange accidentally sent $10M to a woman instead of $100. The more alarming thing is that it didn’t discover the mistake for a whopping 7 months.
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