FTX down in the dumps
It's a mess over in the cryptocurrency world
Good morning. We have you prepared for any water cooler chat about SBF and FTX this week. No clue what that means? Well, consider yourself lucky, but also, keep on reading.
In this edition: 🥲 Hot mess🎁 Hidden dollars💸 Financial dreams
— Vindhya Kolluru, Editor
* Market data as of 9:00 pm ET Sunday, November 13.
What the heck is going on with FTX?
Send your condolences to NFL legend Tom Brady because not only did he 1) fumble the bag with Gisele Bündchen but 2) he lost millions of dollars from his poor bet on the world’s third-largest cryptocurrency trading platform, FTX. FTX is down in the dumps after its billionaire founder made…uh…major calculation errors, or in his words: “I f—d up.”
That he did: FTX’s meltdown has been nothing short of stressful for the entire cryptocurrency market and investors.
Some background: Cryptocurrency trading platforms and similar to other trading platforms (like Wealthsimple) in that they let you trade (buy or sell) securities (a catch-all term for stocks, bonds, mutual funds, etc.). FTX is a Bahamas-based trading platform that allows users to buy, sell, and store cryptocurrencies such as Bitcoin, Ethereum, Dogecoin (lol), etc.
What’s happening: Buckle up, because last week was a doozy. FTT is a cryptocurrency token that is native to FTX. On November 6, Binance, the world's largest cryptocurrency trading platform, said it would sell its FTT tokens. This sent FTT's price tumbling and traders rushed to pull their money out. This means that over the next few days, FTX received withdrawal requests of an estimated US$6 billion, something FTX was not liquid (aka didn't have the cash on hand) enough to process. Then, on November 8, Binance agreed to bail out FTX by buying the company, but the deal fell through on November 9 due to reports of mishandled customer funds.
FTX had blocked new account signups, halted withdrawals, and advised customers to not deposit funds. Sam Bankmen-Fried (aka SBF) the founder and CEO of FTX has resigned as his platform collapses into bankruptcy. Oh, and SBF, who was worth US$26 billion, just lost 94% of his net worth due to FTX's implosion.
Why it’s a big deal: We’re already in a so-called crypto winter where prices of digital tokens are crashing, but this turmoil has further put a dent in the market. Bitcoin fell 7.6% over 24 hours and Ethereum fell 4.4%. Those that invested in FTX have lost sums including Sequoia Capital and the Ontario Teachers’ Pension Plan (OTPP).
OTPP reportedly invested $95 million USD in FTX. That said, OTPP claimed that this investment represents 0.05% of its portfolio and the loss will have a limited impact on the pension plan.
Moving forward: The cryptocurrency market is known to be super volatile. Regulations around cryptocurrency assets and trading platforms are still developing and evolving, so it'll just be a matter of time before we find out the fate of SBF and FTX. OK, now go womansplain this to your local finance bro.
— Harsimran Garcha
Treat yourself by using old gift cards
Credit: Ekaterina Shevchenko / Unsplash
There's nothing like opening an old wallet to find an old gift card. It's the adult version of the tooth fairy leaving money under your pillow. But experts say you shouldn't wait to spend those gift cards.
Wait, what? Financial expert Robyn Thompson says unused gift cards often have an expiration date. Besides, you can get a bit more bang for your buck by spending those unused gift cards now that inflation is so high. (We don't need to remind you, but in case we do, inflation is around 7% in Canada.) Even worse, Thompson told CTV News that some gift cards have activation, maintenance and dormancy fees if you don't use them.
For some context, as of 2021, Canadians have not used 45% of their gift cards and were sitting on top of $33 million in unused moolah.
The bottom line: You might have forgotten about gift cards during the pandemic when most brick-and-mortar stores were closed. So, this is your reminder to dig up those cards at the back of your junk drawer and get spending.
— Vindhya Kolluru
MONEY CRUSH MONDAY
How Elke Rubach forged a career by helping others plan their financial future
Credit: David Leyes
A family tragedy in her teenage years inspired Elke Rubach to educate herself on financial planning and independence. In 2012, she set out to launch Rubach Wealth, a wealth management firm, to help others do just that. Her goal is to offer tax-efficient financial planning so that clients can build multi-generational legacies, but to also normalize conversations around money. Rubach is also a big believer in giving back: she founded Fashion Heals for SickKids, a movement that has raised more than $450,000 for pediatric cancer care and research.
One piece of advice: "Get a coach and / or a mentor because it's hard to read the label from inside the bottle. You want someone who's experienced and understands your industry, but you may also want to have a second coach that has nothing to do with your industry. You’re not looking for a cheerleader, but somebody with whom you connect and have similar values and who will guide you in the process of what you want to do."
What's on her bookshelf: "The Forgotten Generation by Sabine Bode. I believe it’s only in German, but it’s about kids born during the war and how that generation has had such a hard time establishing relationships with others. Disney U by Doug Lipp and Necessary Endings by Dr. Henry Cloud are two other favourites."
Her one piece of financial advice: "If you have kids, talk to your kids about personal finance. And if you don't know how, reach out to someone and learn. Normalize talking about money and planning for your financial future, including the importance of having a will."
➡️ Read the full Q&A to get to know what Rubach has learned on her journey to building her own wealth management firm, what's on her bookshelf and much more.
Other things we read and we liked
🔮 We love the premise behind this 15-minute exercise to help you find your purpose.
🐀 Science says rats love to bop to Lady Gaga.
⏰ It's time to let go of the '90s.
💜 Listen to this heartwarming Modern Love episode about a man with chronic illness who is learning to savour the time he has left with loved ones.
🛍 During hard economic times, the real flex is a Costco membership card.
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