This Twitter user summarises some of the findings from the FTX Chapter 11 First Day Affidavit, written by John Jay Ray III, who oversaw Enron’s bankruptcy proceedings.
Sharing it here because this should be close-to-definitive view as to what went wrong in FTX and Alameda, and the other interlinked companies. If EA is to learn lessons, in some shape or form, from what happened then this should be a key text.
Readers may dislike the tone of the thread summarising the affidavit, which is outraged and could be perceived as hyperbolic. That said, when I read the contents of the source text, the same incredulity and close-to-outrage arose in me; especially with regards to basic financial governance and human resources.
To note, sadly, the affidavit backs up arguments made across the forum in the last 12 days about governance, in this post and different comments (which I have failed to find). One particularly damning quote is: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here”. But there’s much more in it than that.
I read the declaration. The tone of the thread is a fair reflection of the declaration.
It seems extremely likely that FTX was insolvent at all relevant times for fraudulent conveyance purposes.
Some people have wanted to wait for more information before condemning SBF as a fraudster, or have hoped he committed a single large ethical lapse in a crisis. Those positions are in my mind no longer plausible.
I don’t see how this doesnt result in a very long prison sentence for SBF.
- jonwu.eth [last 2 tweets of the thread]
It seems, in the absence of evidence to the contrary, the people running this fund (with the stated founding mission of furthering EA) were seeking to enrich themselves personally. Sam Bankman-Fried took a $1,000,000,000 loan from Alameda, and members of the company used corporate funds to purchase personal real estate. This may be a net negative to EA causes as it could influence members of the public to question the motives of future earn-to-give endeavors, well intentioned or not. https://twitter.com/GRDecter/status/1593272157907320832
https://www.wsj.com/articles/ftxs-sam-bankman-fried-cashed-out-300-million-during-funding-spree-11668799774