Trapped Inside The Collapse of FTX with Travis Kling

 
 

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“The 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’ve done so much damage at this point.”
— Travis Kling

SHOW DESCRIPTION

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’s 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’d 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’s sister company Alameda Research. On November 6th, Binance announced it would liquidate its entire holding of FTX’s 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: “I have some pretty bad news to share… I lost my investors’ 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.” 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’s obvious we’re still in the midst of this mess.

TIMESTAMPS

00:02:12: Introductions
00:04:10: The FTX implosion and realisation of lost funds
00:13:51: Considering a future in crypto
00:16:36: Reflecting on the crypto market as a whole
00:20:46: The personal toll
00:26:36: The scarcity of time versus wealth
00:32:34: Looking at FTX vs Mt. Gox
00:41:45: Bitcoin vs crypto
00:46:17: Responsibilities with taking on crypto sponsors
00:52:32: Possible solutions re trusted middlemen in crypto
01:01:07: Distorted signals, and Alameda, FTX, LUNA
01:14:46: Counterparty risk, and hype cycles
01:24:42: Rates and inflation
01:29:08: Looking ahead to 2023
01:33:47: Final comments

 

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SHOW NOTES

Connect with Travis:

Mentioned in the interview:

Other Relevant WBD Podcasts:

PodcastPeter McCormack