Number Go Up: Inside Crypto's Wild Rise and Staggering Fall

by Zeke Faux

“Why not, like, take some risk off?” “Okay. In retrospect, absolutely. That would’ve been the right, like, unambiguously the right thing to do,” he said. “But also it was just, like, hilariously well-capitalized.” Bankman-Fried’s problems had really started in May 2022, months before the CoinDesk article or CZ’s divestment. That month, the collapse of Do Kwon’s Terra-Luna scheme set off a crypto credit crisis. Some of the biggest crypto funds had invested in the $60 billion Ponzi scheme with borrowed money and went bankrupt. This made those who’d lent billions of dollars to Alameda nervous. They asked Alameda to repay the loans, with real money. But the fund didn’t have enough. Alameda had invested the money in things that were hard to sell—like venture-capital deals and huge amounts of obscure shitcoins. There were two different versions of what happened next. Ellison, by then the sole head of Alameda, had told her side of the story to her staff at an all-hands meeting amid the crisis. Ellison said that she, Bankman-Fried, and his two top lieutenants—Gary Wang and Nishad Singh—had discussed the shortfall. The honest move would have been to admit that Alameda was broke and face the consequences. But, Ellison said, they decided not to. Instead, Ellison told her staff, Alameda borrowed “a bunch of funds” from FTX, which “led to FTX having a shortfall in user funds.” She said this was possible because the way Alameda’s account on FTX was set up, the fund was allowed to “go ne...