The FTX Take-Down: What the CoinDesk news report said

The FTX debacle dominates social media crypto channels. The story unfolded with a little news report with a long title on CoinDesk, which reported that the two parts of Sam Bankman-Fried’s “crypto empire” – FTX and Alameda Research had a meeting point – the latter’s balance sheet. It said “Much of it is the FTT token issued by FTX”, and that “That balance sheet is full of FTX”

But how much was the share? As per the report:

The total assets of Alameda: $14.6 billion

Unlocked FTT: $3.66 billion

FTT collateral: $2.16 billion

So a total of 5.82  / 14.6 =  39.8%

That’s close to 40% of assets in the form of tokens, described as “printed-out-of-thin-air token” in a industry professional’s quote in the report.

The report described the problem of Alameda Research (not the other arm, FTX) as: “a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto.”

Alameda appears to have had a buy-back and burn scheme to sustain the price of FTT. It had also proposed to buy-back Binances’ FTT portfolio when the latter wanted to sell. Seriously or not, this is now history.

Before the scandal, FTT traded in the $24-25 range. Today it is down to around a dollar (https://coinmarketcap.com/currencies/ftx-token/)

The other red signal in the report was the huge amount of liabilities of Alameda – around $8 billion.

The tweet admission from Sam Bankman-Fried about being mistaken about the leverage and the liquidity they thought they had went on to confirm that FTX and Alameda were on shaky grounds.

The subsequent bank-run brought the house down. What has followed is the turning back of pages to see, post-facto, what was missed in the marketing hype.  Twitter is flooded not just with memes, but also posts showing the good words and projections made about FTX and its founder. Links and connections are now being unearthed – the World Economic Forum, Ukraine, Democrats, Party funding, family lineage, close friends and dates… FTX is now being described as a “cabal” run by a few close cross-dating friends, or a “gang of kids in the Bahamas”.

Is 39.8% too much? What would have been a more appropriate and acceptable figure?

Sources:

https://finance.yahoo.com/news/ftxs-crypto-empire-reportedly-run-184555572.html

If you or anyone known has lost funds to FTX or its subsidiaries, please comment below or write to Blockmagic.

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