Nov 11, 2022, 11:00AM EST · 5 min read

Hey Reader,

Time to discuss the collapse of FTX and their likely to be imprisoned CEO Sam Bankman-Fried.

But first we must state the obvious: Not your keys, not your coins. If you have any funds on FTX.US withdraw them immediately.

Autism Capital 🧩 @AutismCapital PSA: If you're currently in FTXUS (why?) we'd *very seriously* consider getting out now. If Alameda/FTX Intl. has commingled funds *at all* with FTXUS the exchange will have bankruptcy claim risk aka the world will be coming for your money. Pay attention. November 10th 2022 40 Retweets 204 Likes

I've been in the digital assets space since 2017 and it seems like no matter how many examples of exchanges mismanaging customer funds, people continue to leave life altering amounts of their crypto on these platforms.

OGs remember Poloniex, BitGrail, QuadrigaCX, and Thodex. But we don't even have to go back that far. Since I've started this newsletter we've had both BlockFi, Celsius and Voyager all fail. Now we have FTX.

What is going on here? One word: greed.

I normally don't have more than $1000 worth of crypto on any exchange unless I'm actively trading. Everything is stored in either a hot wallet like Exodus or Blockchain.com or hardware wallet like a Trezor or Ledger.

I don't trust any exchange and I only use exchanges that allow self-custody. Exchanges like Gemini, Coinbase, and Kraken all allow crypto withdrawals. With self-custody I don't have to trust any exchange so how they operate their business doesn't affect me at all.

This is standard practice for anyone serious about accumulating a significant amount of crypto assets. And yet so many continue to ignore this rule.

It's as if people truly don't understand why we are here to begin with. They literally don't understand what they are buying. To them Bitcoin and Ethereum are no different than Apple and Microsoft stock. Just a number on a screen with the hope the number goes up. Let me remind you...

We are here to remove middleman entirely.

​This is specifically what crypto assets were designed to do. When you remove the middleman your crypto can't be frozen, seized, or debased. You and only you will have access to your crypto.

And if only you have access to you crypto and only I have access to my crypto, we can conduct commerce directly without the need of anyone else. Add in DeFi, NFTs and smart contracts and we can create an entire economy without middlemen.

No need for VISA, Mastercard, the USGov, Chase, Google, Apple, no need for anyone but the parties directly involved.

But to make this goal a reality we must self-custody our crypto! I can't stress this enough! Either in a hot wallet like Metamask or a hardware wallet like Trezor. This puts us in full control over the movement and security of our funds. An exchange going bust wouldn't affect access to our funds in the slightest. A lesson many FTX traders have painfully learned once again.

If this is too much for you I want you to seriously ponder why you are here in the first place. The US Government, Wall Street and centralized entitles in crypto has shown us time and time again how human greed can corrupt even the best of us.

The only way out is to build technology that removes the need for trust completely. That is what crypto assets deliver. This is why I'm here.

I'm sure Sam Bankman-Fried had noble intentions in the beginning but slowly but surely the industry realized he wasn't aligned with Satoshi's vision. He wanted to centralize crypto and started lobbying Congress to do so.

unusual_whales @unusual_whales Midterms are in 8 days. Here are the largest donors so far in the 2022 midterms: - George Soros with over 120 mln - Elizabeth and Richard Uihlein at over 80 mln - Ken Griffin of Citadel with nearly 70 mln - Sam Bankman with nearly 50 mln - Michael Bloomberg +20 mln Incredible. pic.twitter.com/Oc5SdLPBL7 October 31st 2022 786 Retweets 2,443 Likes

And yet once again we see the result of centralization.

Don't trust, verify.

And when we dig deeper into this mess we see another usual culprit. One of the 3 Ls that have destroyed many men: Leverage.

Leverage allows you to multiply your profit when the price of an asset goes up but it also multiplies your loses when the price goes down. It's a useful tool to maximize profits on assets that don't fluctuates in value much like currencies and bonds.

But for crypto, an asset class that can 20x in less than a year then crash 80%+ the next year, it is stupid and unnecessary. Many crypto exchanges allow you to use 100x leverage meaning you could 100x your money off an 1% increase. Sounds amazing until you realize an 1% decrease meaning losing 100%.

Don't use leverage in crypto.

This FTX situation makes me think "smart money" isn't as smart as they say, they're just levered up.

Sam took leverage to another level. He allegedly took investors funds and commingled them with his trading arm Alameda Research. He then tried to cover his losses with the FTT token, a token he created out of thin air and owns majority of the supply.

He then used his FTT tokens as collateral in various loans lent out to different players in the industry.

What could go wrong?

Lyn Alden @LynAldenContact Imagine McDonald's makes its own money, let's call them clown-bucks, keeps most of it, and sells some to the market. McDonald's then uses their remaining clown-bucks as collateral for actual loans. And then people remember clown-bucks aren't real. November 8th 2022 4,028 Retweets 27,902 Likes

Back to the elephant in the room. It is becoming difficult to feels sorry for exchange hack victims. It is almost 2023. If you are still here I assume you believe in Satoshi's vision. If that is the case please do yourself a favor and learn how to self-custody your crypto. You have been warned.

Now let us thank CZ for showing the world who Sam truly is. We are down but not out.

CZ 🔶 Binance @cz_binance Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won't pretend to make love after divorce. We are not against anyone. But we won't support people who lobby against other industry players behind their backs. Onwards. November 6th 2022 6,053 Retweets 35,294 Likes

This technology is too important to the world to let bad faith actors take it over for their own selfish purposes. Especially as the world becomes more digital. The WEF doesn't want us owning anything especially not freedom tech. If we must endure painful price action in the short term to flush them out so be it. Tether, you're next.​

​Kanye West losing his Chase Bank account shows us how quickly they can lock you out of their financial system for whatever reason.

As we did with religion, we are separating money from state once and for all.

Never forget why we are here and keep staking those sats.

KB