Sam Bankman-Fried owes me 2.28 Litecoin


It's been about a week since SBF absolutely blew up this space. Unfortunately, Crypto has to deal with a major scandal yet again. Probably the biggest one since Mt. Gox. And by the numbers, upwards of 32 billion, this is probably THE biggest scandal in crypto that has ever happened. At the center of this whole thing, this huge fiasco that led to the loss of billions is a Vegan named Sam. Sam Bankman Fried.


The scandal is big in numbers, scope, and girth. These are the topics that I've seen mentioned in various articles and Twitter: Veganism, Leverage, Lying, Autism, FTT, FTX, Blockfi, Binance, Ukraine, Orgies, Yield Farming, Ponzis, The SEC, The Bahamas, My father in law concerned if I had money in crypter tokens, Not your Keys, Tom Brady, Class Action Lawsuits, Extradition, Bankruptcy, A run on the banks, CZ Binance, Shocked and Dismayed, the Deep State, Regulation, Etc. The list just goes on and on.


While the headlines make for juicy details and amazing water-cooler talk, the pain is real. The pain is very real. Estimates of 1-2 Billion (with a B) of customer funds have been reported to be lost, frozen, or liquidated. This doesn't include many other counter-party risks so the numbers can get much bigger than this. I for one am not expecting to get the 2.28 Litecoins back that I had on Blockfi. It's my fault that they were on there, sh*t happens. I accumulate coins on Blockfi via Dollar Cost Averaging and pair that with the Blockfi credit card (possibly a defunct product) I am able to stack Litecoin and Bitcoin. After some accumulation, I take it off and send it to a Non-custodial wallet. Unfortunately for me and many others, an exchange like Blockfi, went from solvent to insolvent in a matter of days. At the centerpiece of the insolvency, are FTX and Sam Bankman-Fried. SBF/FTX extended a loan to Blockfi to remain solvent in the aftermath of the 3 arrows capital debacle. One train wreck leads to another larger train wreck. It sucks because Blockfi was one of those companies that seemed to have been doing things right, but ever after being hit with an SEC fine and the 3 arrows capital fiasco seemed to do everything wrong. Now that FTX is possibly bankrupt, It doesn't look good for Blockfi and anybody who had assets on the platform. Don't play with leverage kids.


So how do you, an individual, remain solvent in an insolvent world?


Bitcoiners, Litecoiners, and other coiners are having to relearn the same mistakes of the past. Not your keys, not your coins.



Above is a video from Andreas Antonopoulos that I hope drives this point home. So how does one never make this mistake of trusting the exchanges again? The most prudent way is to store your coins in a NON-Custodial wallet. Non-Custodial meaning you are in charge, not the exchange. It is your wallet. If you are a crypto native it would be like holding cash in your physical wallet, rather than storing your money in the local bank.


Non-custodial wallets have been around since the early days and include both desktop and mobile applications. Mobile wallets like Litewallet and Exodus amongst others are non-custodial. Or you could store them on hardware wallets like Ledger or Trezor. All of these options allow you access to seed words and private keys. These are your keys, these are your coins. This is really the only way you can ensure that you don't get scammed, you must hold your keys in a non-custodial wallet. There are drawbacks to this strategy, it's simply not as convenient. You have to ask yourself though, what do you desire, convenience or security? I'm sure everyone in the past couple of days who have lost money, wishes they chose security. Good practices, and good hygiene, equal no lost money.


So what will the role exchanges be, and what should they be? They should not be used to store your coins, because this shit happens. There are more reputable exchanges than others, but ultimately these exchanges have infinitely more risk than holding your coins in a wallet where you have access to the seed words. You can buy Bitcoin, and Litecoin on the exchanges and once available send them to your hardware wallets. There are even companies that skip the exchange and send the coins straight to your wallet of choice. These are companies like Swan Bitcoin, gethedge.io, bitwage, and others. Even your hardware wallets and non-custodial wallets like EXODUS have the capability to use third-party processors (Like MoonPay and Simplex) to buy Bitcoin/Litecoin and have the coins sent directly to your wallet of choice. A lot of these payment processors including exchanges use Apple Pay as well. It's getting more convenient to purchase Bitcoin and Litecoin, but many people including myself are forgetting to store them in the best way possible. Direct to non-custodial wallet solutions, typically come at a higher fee level, but looking at recent history, this is a small price to pay for security. Simplex has been around for a long time and is embedded in a lot of different custodial and non-custodial wallets.


There are some who say only Bitcoin Maximalists have explained the lessons of not your keys, not your coins. Bitcoin Maxis make up a large percentage of the Not Your Keys movement, but they aren't the only ones. Litecoiners have preached this lesson as well. Bitcoin history includes something called the Proof Of Keys event on January 3rd. Popularized by Trace Mayer. This movement has been quiet for the past couple of years, but I am hoping for a resurgence. Self Custody isn't blockchain specific. I would guess that the Bitcoin and Litecoin communities have the highest amount of knowledge in this space and in a distant 3rd place is Ethereum. This is just my opinion. You see, Ethereum is all into defi, metamask, yield farming, and all that jazz. I don't think they are as ingrained as other communities to get your coins off the exchanges. This is important. Why? Ethereum and other coins are acting a bit more like fiat than what Satoshi envisioned. If I am not mistaken, Satoshi envisioned a world where retail and individuals took ownership of Bitcoin without the need of the banksters, fraudsters, and the Sam Bankman-Fried's of the world. Some of us understand this lesson, while others are struggling to cope.


Anyways, It is super unfortunate that history had to repeat itself. The fallout of Mt. Gox certainly rhymed with the implosion of FTX. There is enough money that has been lost in this scandal that I truly think a LOT of people will finally learn a hard lesson. Let's hope we don't have to learn it again. You've got to set up a way to buy coins and get them on a non-custodial wallet ASAP. Otherwise, you are playing a risky game. And this sound money movement could vanish. Custodians may have their place in this ecosphere but they are not to be trusted, especially not now. Help your friends and family understand that you've got to get your keys off the exchanges, and if that isn't possible do as much research on a custodian before trusting them. Trusting these media darlings is going horribly wrong. They don't care about you, never have. I still think this space can work without over-regulation, we just have to be wary of the SBF types who buy commercial real estate in the Bahamas and engage in nefarious activities.

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