A crypto exec shares details of his phone calls with Sam Bankman-Fried days before FTX imploded
Good morning to my favorite corner of the internet. Senior reporter Phil Rosen here. It's good to see you.
Today, we're zooming in on the revealing calls that took place just before the fall of FTX, between Sam Bankman-Fried and a rival exec.
I caught up with that exec to hear about Bankman-Fried's eleventh-hour scramble for a billion-dollar deal.
But before we get to that: Between the crypto, Twitter, and Taylor Swift headlines, it's easy to forget there are other things happening, too. Here's what else to bring to your water cooler chat today:
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Now, shall we?
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1. Sam Bankman-Fried, the recently dethroned king of crypto, had been making a lot of calls seeking a lifeline before his firm crumbled.
Days before FTX filed for bankruptcy, he was reaching out to competitors, including Lennix Lai, the director of financial markets at OKX, one the largest crypto exchanges in the world.
Over the weekend, I sat down with Lai, who had a working relationship with Bankman-Fried and recently spoke to him.
Ahead of FTX's November 11 bankruptcy filing, Bankman-Fried reached out to Lai late at night in Southeast Asia on November 8.
"The very first call that we received from Sam he said everything's under control, but they might need cash, one to two billion dollars max in short-term credit, in exchange for FTT value or equity in FTX," Lai told me.
He didn't reject the request, and said he was willing to help but just needed to mull it over with his team at OKX first.
Bankman-Fried, Lai added, sounded calm and admitted the liquidity crunch was his own fault.
Then, hours later, Bankman-Fried called again with much more anxiety in his voice.
"He mentioned they were in a very critical situation, and only got a few hours," Lai said. "We didn't know what that meant. Also, they were talking about a lot more billions [of dollars], so that was difficult for us."
Lai encouraged Bankman-Fried to reach out to Binance CEO Changpeng Zhao, because he could help stabilize FTX's native token, FTT, which Lai saw as one of the key issues.
But even on that second call, Lai didn't explicitly say no to Bankman-Fried. He just wasn't prepared to make a billion-dollar rescue deal without taking several days to make a decision.
Get the full details on my conversation with OKX's Lennix Lai here.
Thoughts or feedback? Let me know on Twitter (@philrosenn) or email me (prosen@insider.com).
In other news:
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2. US stock futures fall early Monday, as global economic outlook worsened amid concerns that China could tighten COVID-19 restrictions. Meanwhile, Japan says natural gas is sold out until 2026. Here are the latest market moves.
3. On the docket: Zoom Video Communications, Dell Technologies, and more, all reporting.
4. This top-performing fund manager warned of a huge collapse for stocks six months ago. But he's since changed his tune and is now bullish for what's ahead. He broke down what he's investing in right now.
5. European Central Bank President Christine Lagarde said Europe will need to face higher interest rates. In her view, a potential recession won't be enough to tame inflation on its own. Policymakers currently are weighing whether to slow down the pace of rate hikes at the December meeting.
6. Home prices could fall faster if once-reluctant sellers flood the market with more supply. While home sales and construction have adjusted sharply to collapsing demand, home prices have much further to fall, according to Pantheon Macroeconomics. "We think prices need to drop by about 20% from their spring peaks in order to reach a sustainable level."
7. Wall Street warnings suggest that a recession is imminent. BofA strategists pointed to big drops in pending home sales, lumber prices, and global freight rates as signals of a downturn. But that doesn't mean there isn't a "big bull trade" to make.
8. Morgan Stanley analysts handpicked dividend stocks they think will provide attractive yields over the next three to five years. And they expect those payouts to keep rolling in even as the economy slows down. See the list of 21 names here.
9. This 15-year veteran IRS lawyer said if you lost money on FTX, there's a good chance of getting something back still. He said you may need to file a proof of claim to be considered an FTX creditor, and that you're still responsible for filing taxes related to your trades on the exchange. Here's what else he recommends as bankruptcy proceedings unfold.
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10. Bank of America downgraded Coinbase stock as the FTX fallout spreads through the sector. Analysts clarified that Coinbase isn't another FTX, but that doesn't mean it's immune from contagion. Here are three headwinds the firm has to navigate in the aftermath.
Keep up with the latest markets news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.
Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email prosen@insider.com
Edited by Jason Ma in Los Angeles and Hallam Bullock (@hallam_bullock) in London.
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