I don’t think we know enough yet to know whether this was a lie or not. I’d hold out on passing judgement until we get more details about what exactly happened.
Yeah, seems fair. I’ve set a reminder to check in again in 2 weeks and update my comment with any new info that clearly reduces uncertainty on this (and in the absence of that I’ll probably set another reminder).
This was a lie and he knew it was a lie. There are numerous reports now that FTX has an 8 billion dollar hole in its balance sheet due to loans made to Alameda that were collateralized by illiquid tokens. The Wall Street Journal is reporting Alameda owes FTX $10 billion.
There is no chance whatsoever that the CEO did not know that his company was loaning over half of customer assets to a hedge fund he started and in which he owned a 50% equity stake.
I think he is still lying about it on Twitter today. He wrote this in his explanation thread:
a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users’ margin
Tokens can be illiquid because they are locked for staking and a few other reason that allow them to be liquid again in the future. Do we know more about those illiquid tokens to tell whether they are worth something or whether it makes sense to think of them as being worth zero?
Most of the illiquid tokens were FTT, FTX’s proprietary token, which has dropped 97% from its all-time high (and about 89% just this week).
The remainder are a mish-mash of others, but they account for less than 10% of the total.
They had some other assets on their balance sheet, though the reports about how much and of what are very mixed and the only actual data source we have is from before the crash. I believe they sold off a few hundred million Bitcoin, Ethereum and Solana trying to prop up the price of FTT at $22.
Look at the price of FTT on the evening of the 7th. Volatility goes to basically zero. You only see that when there’s one buyer in the market and everyone else wants to sell.
There’s some articles mentioning huge outflows from Alameda-associated wallets around that same time, but I’m too lazy to go find them.
But all that is kind of besides the point. The tokens were illiquid because Alameda owned 180% of the circulating supply. If they made bad trades and FTX was forced to liquidate that collateral, who was going to buy it? There were no buyers.
That’s also why they were so desperate to keep the price up; FTT was like 90% of their net assets.
I don’t think we know enough yet to know whether this was a lie or not. I’d hold out on passing judgement until we get more details about what exactly happened.
Yeah, seems fair. I’ve set a reminder to check in again in 2 weeks and update my comment with any new info that clearly reduces uncertainty on this (and in the absence of that I’ll probably set another reminder).
I can give you an update right now:
This was a lie and he knew it was a lie. There are numerous reports now that FTX has an 8 billion dollar hole in its balance sheet due to loans made to Alameda that were collateralized by illiquid tokens. The Wall Street Journal is reporting Alameda owes FTX $10 billion.
There is no chance whatsoever that the CEO did not know that his company was loaning over half of customer assets to a hedge fund he started and in which he owned a 50% equity stake.
I think he is still lying about it on Twitter today. He wrote this in his explanation thread:
Again, implausible for the reason above.
Tokens can be illiquid because they are locked for staking and a few other reason that allow them to be liquid again in the future. Do we know more about those illiquid tokens to tell whether they are worth something or whether it makes sense to think of them as being worth zero?
Most of the illiquid tokens were FTT, FTX’s proprietary token, which has dropped 97% from its all-time high (and about 89% just this week).
The remainder are a mish-mash of others, but they account for less than 10% of the total.
They had some other assets on their balance sheet, though the reports about how much and of what are very mixed and the only actual data source we have is from before the crash. I believe they sold off a few hundred million Bitcoin, Ethereum and Solana trying to prop up the price of FTT at $22.
Look at the price of FTT on the evening of the 7th. Volatility goes to basically zero. You only see that when there’s one buyer in the market and everyone else wants to sell.
There’s some articles mentioning huge outflows from Alameda-associated wallets around that same time, but I’m too lazy to go find them.
But all that is kind of besides the point. The tokens were illiquid because Alameda owned 180% of the circulating supply. If they made bad trades and FTX was forced to liquidate that collateral, who was going to buy it? There were no buyers.
That’s also why they were so desperate to keep the price up; FTT was like 90% of their net assets.
Updated with new info.