Accidents will happen, they only hit and run

Paul has already discussed this story a couple of times, but the FT story on FTX has even more incredible detail. Inter alia, it appears that Bankman-Fried’s little oopsies included “accidentally” mixing the money of his depositors with his casino trading fund:

Friday’s bankruptcy filing provided few details on the group’s financial health but said both assets and liabilities range between $10bn-$50bn, and that the number of creditors exceeds 100,000. A spreadsheet listing FTX international’s assets and liabilities, seen by the Financial Times, point at the issues that brought Bankman-Fried crashing back down to earth.

It references $5bn of withdrawals last Sunday, and a negative $8bn entry described as “hidden, poorly internally labled ‘fiat@’ account”. Bankman-Fried told the Financial Times the $8bn related to funds “accidentally” extended to his trading firm, Alameda, but declined to comment further.

Earlier this week, he tweeted that FTX international had $4bn in easily tradeable assets when it faced Sunday’s $5bn surge of withdrawals. “There were many things I wish I could do differently than I did, but the largest are represented by these two things: the poorly labeled internal bank-related acount [sic], and the size of customer withdrawals during a run on the bank,” the spreadsheet adds. In the investment materials, FTX Trading Ltd, the company behind the main international exchange, is recorded as having liabilities of $8.9bn, the biggest portion of which is $5.1bn of US dollar balances.

Healthy companies typically have assets that match or exceed their liabilities. The spreadsheet says FTX Trading had a total of $9.6bn of assets, but it is unclear how much of that value could be realised. 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.”

The company’s biggest asset as of Thursday was $2.2bn worth of a cryptocurrency called Serum. Serum’s total 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.

I think there’s very good reason to be skeptical about Rational Altruists whose plans to achieve pure selflessness involve making shitloads of money for themselves in finance first, and that goes double if the finance one is going into looks awfully like a Ponzi scheme.