According to the guy who wrote the 2nd book on FTX, it was a fraud from mid-’21, when:
FTX lost $1B when a trader took advantage of a software bug using a token called MobileCoin. The loss would’ve wiped out all the revenue FTX had ever made. SBF told employees to count the loss as Alameda’s. This concealment enabled FTX to raise ~$1B from VCs.
Even with that VC money, Alameda then borrowed more from FTX (especially for the Binance buyout). “We don’t really have the money for this,” Ellison testified that she told SBF.
Then even before SBF’s spending spree really got going, Ellison warned him that Alameda’s debts were risky. But SBF asked her to invest an additional $3B in VC, even though Alameda had already helped itself to ~$2B from FTX users and borrowed $9B from other lenders. Alamada’s biggest asset was crypto that FTX had either created himself or was pushing (FTT, etc.) and without those, FTX owed ~$3B more than it had. She testified telling SBF that if they made the investments, and the market crashed and lending firms asked for their money back, Alameda would go broke and FTX would fail. Which then happened.
Thanks! Do you understand how that article is claiming that the borrowing occurred? I think maybe it is referring to the “backdoor” I listed, but it isn’t very clear.
According to the guy who wrote the 2nd book on FTX, it was a fraud from mid-’21, when:
FTX lost $1B when a trader took advantage of a software bug using a token called MobileCoin. The loss would’ve wiped out all the revenue FTX had ever made. SBF told employees to count the loss as Alameda’s. This concealment enabled FTX to raise ~$1B from VCs.
Even with that VC money, Alameda then borrowed more from FTX (especially for the Binance buyout). “We don’t really have the money for this,” Ellison testified that she told SBF.
Then even before SBF’s spending spree really got going, Ellison warned him that Alameda’s debts were risky. But SBF asked her to invest an additional $3B in VC, even though Alameda had already helped itself to ~$2B from FTX users and borrowed $9B from other lenders. Alamada’s biggest asset was crypto that FTX had either created himself or was pushing (FTT, etc.) and without those, FTX owed ~$3B more than it had. She testified telling SBF that if they made the investments, and the market crashed and lending firms asked for their money back, Alameda would go broke and FTX would fail. Which then happened.
archive.is/FYMhv#selection-1959.0-1962.0
If they can now pay back user due to the Anthropic investment, that’s ex post luck.
Thanks! Do you understand how that article is claiming that the borrowing occurred? I think maybe it is referring to the “backdoor” I listed, but it isn’t very clear.