I strongly agree with this comment because I personally created an account to comment on several posts that seemed wildly ignorant about the entire situation. It was incredible to me that the reaction was just “lets see how this plays out, they are going through a tough time” versus immediately reevaluating all of their priors about FTX and Sam. It was very clear that something was incredibly wrong and likely fraudulent once he tried to sell to Binance.
It was a sign that FTX was in deep trouble, but at this time it was not yet clear whether there had actually been fraud or not.
That the problem was a solvency problem and not a liquidity problem was revealed, I think, by the following sources of evidence (among others):
Binance refusing to go through with the deal after only cursory DD
On-chain data showing only on the order of $1B of assets owned by FTX against estimated liabilities on the order of $10B
The leaked FTX balance sheet, which is what started the whole mess
The on-chain estimates turned out to be more or less accurate: FTX also held some illiquid venture investments but these were not sufficient to change the order of magnitude of the assets at their disposal.
Probably until around Nov 9 it remained plausible that FTX was in trouble as a result of some kind of asset mismatch between the two sides of its balance sheet, which would be more of a liquidity problem and something that a Binance bailout could have solved. However, around Nov 9 the evidence was just overwhelming that around $10B of customer assets were missing, and such a gap was impossible to explain by anything other than FTX having used customer deposits for their own purposes.
There was pretty much no distinction between FTX and Alameda’s assets and liabilities by this point. It doesn’t matter what you want to call it, but it’s true Coindesk initially reported this document as “Alameda’s balance sheet”.
I find it very strange that you thought this insignificant detail is worth commenting on and ignored everything else in the comment.
it’s true Coindesk initially reported this document as “Alameda’s balance sheet”.
That, and there was later a separateset of newsarticles around “FTX’s balance sheet”, on November 12th through 15th.
insignificant detail
I don’t think it’s insignificant: the main interpretation I saw of the November 2nd news was that this was bad news about Alameda, not FTX. Which is pretty reasonable: at the time the true extent of their interconnection was not public.
I find it very strange that you thought this is worth commenting on and ignored everything else in the comment.
If you’re reading through the forum and see a point where you have something to add, I think it’s generally good to respond even if there are other points where you don’t. It’s also not a strong signal that the addressed point is the most important one.
If you’re reading through the forum and see a point where you have something to add, I think it’s generally good to respond even if there are other points where you don’t. It’s also not a strong signal that the addressed point is the most important one.
That, and there was later a separateset of newsarticles around “FTX’s balance sheet”, on November 12th through 15th.
That balance sheet (if it can be called that) is also not FTX’s balance sheet by your standards; it’s a balance sheet of all FTX-related entities (including Alameda).
I don’t think it’s insignificant: the main interpretation I saw of the November 2nd news was that this was bad news about Alameda, not FTX. Which is pretty reasonable: at the time the true extent of their interconnection was not public.
This is true but I don’t see how it matters in the context we’re talking about here.
I strongly agree with this comment because I personally created an account to comment on several posts that seemed wildly ignorant about the entire situation. It was incredible to me that the reaction was just “lets see how this plays out, they are going through a tough time” versus immediately reevaluating all of their priors about FTX and Sam. It was very clear that something was incredibly wrong and likely fraudulent once he tried to sell to Binance.
Why was trying to sell to Binance a sign of fraud?
It was a sign that FTX was in deep trouble, but at this time it was not yet clear whether there had actually been fraud or not.
That the problem was a solvency problem and not a liquidity problem was revealed, I think, by the following sources of evidence (among others):
Binance refusing to go through with the deal after only cursory DD
On-chain data showing only on the order of $1B of assets owned by FTX against estimated liabilities on the order of $10B
The leaked FTX balance sheet, which is what started the whole mess
The on-chain estimates turned out to be more or less accurate: FTX also held some illiquid venture investments but these were not sufficient to change the order of magnitude of the assets at their disposal.
Probably until around Nov 9 it remained plausible that FTX was in trouble as a result of some kind of asset mismatch between the two sides of its balance sheet, which would be more of a liquidity problem and something that a Binance bailout could have solved. However, around Nov 9 the evidence was just overwhelming that around $10B of customer assets were missing, and such a gap was impossible to explain by anything other than FTX having used customer deposits for their own purposes.
> The leaked FTX balance sheet, which is what started the whole mess
I think you mean the leaked Alameda balance sheet, on November 2nd?
There was pretty much no distinction between FTX and Alameda’s assets and liabilities by this point. It doesn’t matter what you want to call it, but it’s true Coindesk initially reported this document as “Alameda’s balance sheet”.
I find it very strange that you thought this insignificant detail is worth commenting on and ignored everything else in the comment.
That, and there was later a separate set of news articles around “FTX’s balance sheet”, on November 12th through 15th.
I don’t think it’s insignificant: the main interpretation I saw of the November 2nd news was that this was bad news about Alameda, not FTX. Which is pretty reasonable: at the time the true extent of their interconnection was not public.
If you’re reading through the forum and see a point where you have something to add, I think it’s generally good to respond even if there are other points where you don’t. It’s also not a strong signal that the addressed point is the most important one.
I very strongly agree with this.
That balance sheet (if it can be called that) is also not FTX’s balance sheet by your standards; it’s a balance sheet of all FTX-related entities (including Alameda).
This is true but I don’t see how it matters in the context we’re talking about here.
I agree. Binance walking out of the deal after cursory DD also gave plenty of information about how bad the situation at FTX was at the time.