CoinDesk reports Washington, D.C.’s Buddy Sam Bankman-Fried Has Some Explaining to Do.
FTX was a big donor to Democrats in the mid-term elections.
FTX hit an all-time high of $85 on Sept. 9, 2021 but may soon be worthless. It is the biggest plunge ever in market cap.
One Answer In via Bloomberg
That leaves SBF’s net worth at about $1 billion, down from $15.6 billion heading into Tuesday. The 94% loss is the biggest one-day collapse ever among billionaires tracked by Bloomberg.https://t.co/f2lZ1SyGQL
— Mike “Mish” Shedlock (@MishGEA) November 8, 2022
FTX Files for Bankruptcy
It’s all over for FTX. It filed for bankruptcy today and Sam Bankman-Fried, widely known as “SBF”, stepped down as CEO.
The company has a shortfall of $8 billion because it lent customer money to fund trading bets to its affiliated trading firm, Alameda Research.
Unless agreements explicitly allow lending of customer deposits that’s illegal.
SBF Apologizes
In a 22-Chain Tweet Thread SBF Apologizes.
Here are a couple of pieces.
5) The full story here is one I’m still fleshing out every detail of, but as a very high level, I fucked up twice.
The first time, a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users’ margin. I thought it was way lower.
— SBF (@SBF_FTX) November 10, 2022
Point 4 appears to be a lie. FTX is bankrupt with liabilities reported to be $8 billion.
7) And so I was off twice.
Which tells me a lot of things, both specifically and generally, that I was shit at.
And a third time, in not communicating enough. I should have said more. I’m sorry–I was slammed with things to do and didn’t give updates to you all.
— SBF (@SBF_FTX) November 10, 2022
This is not a liquidity issues. FTX lent customer money to Alameda Research and that money went to money heaven.
12) Every penny of that–and of the existing collateral–will go straight to users, unless or until we’ve done right by them.
After that, investors–old and new–and employees who have fought for what’s right for their career, and who weren’t responsible for any of the fuck ups.
— SBF (@SBF_FTX) November 10, 2022
Hoot of the Day
“Every penny of that–and of the existing collateral–will go straight to users, unless or until we’ve done right by them.”
It’s impossible to make this right. The money vanished in a black hole.
19) A few other assorted comments:
This was about FTX International. FTX US, the US based exchange that accepts Americans, was not financially impacted by this shitshow.
It’s 100% liquid. Every user could fully withdraw (modulo gas fees etc).
Updates on its future coming.
— SBF (@SBF_FTX) November 10, 2022
If you have money in FTX US you are nuts if you do not get that money out immediately. And when everyone does, let’s see what is left.
Sparring Partner? WTF?
20) At some point I might have more to say about a particular sparring partner, so to speak.
But you know, glass houses. So for now, all I’ll say is:
well played; you won.
— SBF (@SBF_FTX) November 10, 2022
“Well played; You won.”
WTF?!
These exchanges are not (at least they should not be sparring partners). If FTX did not lend out customer’s money then it would not be in this mess.
22) And, finally:
I sincerely apologize.
We’ll keep sharing updates as we have them.
— SBF (@SBF_FTX) November 10, 2022
Nothing was well played here, by anyone.
The sparring partner did not win a damn thing. The entire crypto space took a hit.
“Sorry” does not work. If SBF illegally lent customer money, he belongs in jail.
Well played my ass. Nothing was well-played by anyone. Bring on the criminal indictments.
Meanwhile, the crypto space which rebounded a bit in yesterday’s stock and bond market melt-up is tumbling again today.
Bitcoin is under $17,000 again, down about 4 percent, and Ethereum is down about 5 percent to $1,250.
The US bond market is closed for Veteran’s Day.
For discussion of yesterday’s melt-up please see Stocks Market Biggest Gains in More Than Two Years, Bond Yields Crash
This post originated at MishTalk.Com.
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Mish
FTX’s bankruptcy and the alleged illegal lending of customer money to Alameda Research is a major blow to the crypto space. Trust is vital, and this incident erodes it further. It’s imperative that regulators investigate thoroughly to protect investors and maintain the credibility of the cryptocurrency industry.
“Nothing was well-played by anyone. Bring on the criminal indictments.”
This is one for the record books, and is a poster child of why audits are necessary. You want a good auditor for your books. They prevent mess ups like this.If he really lent customer money to speculate, he’s toast. There’s going to be a long jail time for this.From billions to jail in a year. That’s gotta be a record except for Madoff.
…and his wife Jane divorced him.
Asset valuation prices are driven from the appraisal
of loan collateral, and loanable funds, which depends upon Gresham’s law: “a
statement of the least cost “principle of substitution” as applied to money:
that a commodity (or service) will be devoted to those uses which are the most
profitable (most widely viewed as promising), that a statement of the principle
of substitution: “the bad money drives out good”.