Re:Major crypto trading firm Alameda Research might be insol...
by JumpCrisscross on Friday November 04, 2022 @11:46AM
(#33468605)
> can always sell assets (at a haircut of course) to evade cash flow insolvency (arguably that's closer to illiquidity really)
For financial institutions, particularly those with short-term liabilities, illiquidity is insolvency. The initial liquidity depresses prices which marks down the balance sheet.
Re:Major crypto trading firm Alameda Research might be insol...
by DebtDeflation on Friday November 04, 2022 @12:46PM
(#33469720)
>You can always sell assets (at a haircut of course) to evade cash flow insolvency
If the assets in question are marketable securities (stocks and bonds), traded commodities, or real estate, then that's generally true. If the asset is some shitcoin for which no real market exists, not so much.
Re:Major crypto trading firm Alameda Research might be insol...
by fddhjjj on Saturday November 05, 2022 @02:59PM
(#33484503)
> To Doug's point the junk tokens are likely at book value on their balance sheet
The linked article in turn links to coin desk which writes
>> Also, token values may be low. In a footnote, Alameda says “locked tokens conservatively treated at 50% of fair value marked to FTX/USD order book.”
That suggests to me the unlocked coins are on the balance sheet at market value and the locked at a 50% haircut.
Alameda being in balance sheet insolvency would depend on their assets taking enough of a hit to wipe out the equity buffer.
To Doug's point the junk tokens are likely at book value on their balance sheet