Unchained Jesse Powell and Kevin Zhou on How FTX and Alameda Lost $10 Billion - Ep. 423
Nov 21, 2022
Jesse Powell, co-founder of Kraken, and Kevin Zhou, co-founder of Galois Capital, delve into the shocking collapse of FTX, pinpointing its root causes and warning signs. They dissect the mismanagement of funds and the dangers of commingled books at Alameda and FTX. The conversation touches on the ethics of utilitarianism and how this philosophy influenced decisions in dire situations. Additionally, they explore the rise of self-custodial wallets as a response to the crisis, questioning the future of regulation and investor trust in the crypto market.
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Inexperience and Lack of Controls
- FTX lacked experience in running a secure, Fort Knox-like operation.
- Their inexperience and small team led to technical debt and lack of controls.
Alameda's Accounting Practices
- Kevin Zhou recalls Alameda's cavalier attitude towards accounting, even before FTX existed.
- They admitted to sometimes ignoring discrepancies of $10,000-$100,000.
FTX's Disregard for Past Lessons
- Jesse Powell noted FTX's belief in their own superiority, rejecting past lessons.
- Their approach involved backroom deals, contrasting Kraken's public advocacy.