Trapped Inside The Collapse of FTX with Travis Kling
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\\u201cThe bad guys are kicking the shit out of the good guys. Look at what just happened, this shit is in shambles right now. The space has this attack vector from intelligent sociopaths, and they\\u2019ve done so much damage at this point.\\u201d
\\u2014 Travis Kling
Travis Kling is the Chief Investment Officer at Ikigai. In this interview, we discuss being on the frontline of the FTX collapse: Ikigai had a large majority of its investment funds in FTX when it stopped withdrawals; Travis had a majority of his liquid net worth also stuck in the bankrupt company.
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2022 will be a defining moment for crypto. In November 2021, the total market valuation was approaching $3 trillion. By the middle of 2022 the market valuation was down to $800 million. UST had depegged in May and caused contagion to ripple through the market: in short order Celsius, 3AC and Voyager all filed for bankruptcy. And yet, the biggest shoe was yet to drop.
In January 2022 FTX was valued at $32 billion. The August/September issue of Fortune magazine compared FTX\\u2019s founder and CEO Sam Bankman-Fried (SBF) to Warren Buffet. Commentators, investors and media outlets likened SBF to JP Morgan as he bailed out struggling competitors. He\\u2019d been hosted by congressional committees in DC to help shape legislation multiple times. SBF was seemingly untouchable.
That all changed in November with a rapid fall. On November 2nd CoinDesk reported on concerning balance sheet issues at FTX\\u2019s sister company Alameda Research. On November 6th, Binance announced it would liquidate its entire holding of FTX\\u2019s FTT token. On November 7th a run on FTX began. On November 8th FTX halted withdrawals. Days later it filed for bankruptcy.
SBF was orchestrating a years-long fraud of epic proportions. Some in the industry had raised concerns, but many believed the hype. What Bitcoin Did did not have a relationship with FTX, but there are scenarios where that could have been different. Others did have relationships with FTX. For example Travis Kling, who had a large majority of his investment funds and personal liquid net worth stuck in FTX.
On November 14th Travis posted a Tweet thread: \\u201cI have some pretty bad news to share\\u2026 I lost my investors\\u2019 money after they put faith in me to manage risk and I am truly sorry for that. I have publicly endorsed FTX many times and I am truly sorry for that. I was wrong.\\u201d This show goes through what happened and reflections on where we go from here. As this show goes live shortly after Genesis filed for bankruptcy, it\\u2019s obvious we\\u2019re still in the midst of this mess.
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This episode\\u2019s sponsors:
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