“The leader in a democracy has to keep the people entertained. That may sound like the wrong word, but it conveys the thought.”

• Some insider trading as a treat: Alameda Amassed Crypto Tokens Ahead of FTX Listings, Public Data Shows

• FTX held less than $1bn in liquid assets against $9bn in liabilities

• Meet the Metaverse Nightclub–Loving Audit Firm That Presided Over FTX’s Financials

• Setting the Record Straight on Crypto, FTX, SBF, Jamie Dimon, and Regulators

• Sam Bankman-Fried’s main international FTX exchange held just $900mn in easily sellable assets against $9bn of liabilities the day before it collapsed into bankruptcy, according to investment materials seen by the Financial Times.

• Conceptually, customers give you money — apparently about $16 billion in dollars, crypto, etc. — and then you hang on to the money and owe it back to them.

  • The largest portion of those liquid assets listed on a FTX international balance sheet dated Thursday was $470mn of Robinhood shares owned by a Bankman-Fried vehicle not listed in Friday’s bankruptcy filing, which included 134 corporate entities.
  • The vast majority of FTX Trading’s recorded assets are either illiquid venture capital investments or crypto tokens that are not widely traded, according to the spreadsheet, which cautions that the figures “are rough values, and could be slightly off; there is also obviously a chance of typos etc. They also change a bit over time as trades happen.”
  • In all, the spreadsheet says FTX Trading’s assets were $900mn of “liquid” assets, $5.5bn of “less liquid” assets consisting of crypto tokens, and $3.2bn of illiquid private equity investments. There is also an obscure $7mn holding called “TRUMPLOSE”. There are no bitcoin assets listed, despite bitcoin liabilities of $1.4bn.
  • The company’s biggest asset as of Thursday was $2.2bn worth of a cryptocurrency called Serum. Serum’s market value was $88mn on Saturday, according to data provider CryptoCompare, suggesting FTX’s holdings would be worth far less if sold into the market. CryptoCompare’s figures take into account the coin’s liquidity.
    • What is Serum? Serum is a “protocol for decentralized exchanges that brings unprecedented speed and low transaction costs to decentralized finance” that runs on the Solana blockchain. Also Serum (the token, ticker SRM) “is the utility and governance token of Serum.
    • One simple point here is that FTX’s Serum holdings — $2.2 billion last week, $5.4 billion before that — could not have been sold for anything like  $2.2 billion. FTX’s Serum holdings were vastly larger than the entire circulating supply of Serum. If FTX had attempted to sell them into the market over the course of a week or month or year, it would have swamped the market and crashed the price
  • FTX’s two  largest asset balances, “before this week,” were $5.9 billion of FTT ($553 million at post-crash prices last Thursday) and $5.4 billion of SRM ($2.2 billion post-crash).
    • “Solana Foundation had ~$1M in cash or cash equivalents on http://FTX.com as of 11/6/22 when http://FTX.com ceased to process withdrawals. This is less than 1% of Solana Foundation’s cash or cash equivalents and as such, the impact … is negligible.”
  • At least $1 billion of customer funds have vanished from collapsed crypto exchange FTX, according to two people familiar with the matter. The exchange's founder Sam Bankman-Fried secretly transferred $10 billion of customer funds from FTX to Bankman-Fried's trading company Alameda Research, the people told Reuters. A large portion of that total has since disappeared, they said.

1. Due to some combination of the speed of its collapse and the casualness of its accounting and governance, FTX did a “freefall” bankruptcy filing, without any prepared first-day motions or declarations. (Here is the filing.) Ordinarily in a bankruptcy you get, pretty early on, a declaration from some senior officer kind of explaining what went down. Here we are still waiting for that.
2. Customers are, obviously, unhappy — including retail customers of FTX US, a separate entity that was supposed to be insulated from FTX international, but that seems to have “stopped processing withdrawals Friday after the bankruptcy filing.”
3. FTX was also an institutional exchange, and some number of crypto hedge funds seem to have gotten caught with their money trapped at FTX.
4. Withdrawals from FTX.com were mostly shut down as it imploded, but some off-ramps were open. For instance Justin Sun’s Tron blockchain provided a credit facility allowing people to, effectively, withdraw Tron’s tokens from FTX. This led to FTX customers dumping other assets to buy Tron assets so they could get out. If you are a blockchain entrepreneur, “buy my token because even if your exchange collapses you’ll still be able to get your money back” is kind of a good pitch?
5. Another off-ramp is that for a while Bahamas residents could take their money out, “per our Bahamian HQ’s regulation and regulators.” But then the Securities Commission of the Bahamas put out a statement on Saturday saying, no, actually, “the Commission wishes to advise that it has not directed, authorized or suggested to FTX Digital Markets Ltd. the prioritization of withdrawals for Bahamian clients,” and that those withdrawals might be voidable in bankruptcy. Oops?