Re:FTX to file for U.S. bankruptcy, CEO resigns
by googlryas on Friday November 11, 2022 @08:31PM
(#33569081)
How would that play have had an effect after the bailout was repaid? I can see if there was the run while the ftts were loaned out, but why would it matter once they were returned?
Re:FTX to file for U.S. bankruptcy, CEO resigns
by bryananderson on Saturday November 12, 2022 @04:22AM
(#33571514)
It wasn’t “repaid”, the FTT was posted as collateral for the loans (customer deposits).
But still, should be fine at that point, right? The loans are nice and overcollateralized, what could go wrong?
Problem is that FTT is itself a bet on FTX. So if the news comes out that FTX and Alameda have these shady linkages, some of your customers will want to withdraw—and at the same time, FTT will fall.
Oops—the value of that collateral just crashed and now you don’t have enough assets to process the withdrawals.
Which makes FTT fall more, and more people want to withdraw.
It’s not like some fluctuation in Bitcoin price, where maybe you could get lucky and wait for it to come back up. FTT is just a bet on you, and you can’t process withdrawals, so why would that ever come back up?
And now you’re insolvent.
https://mobile.twitter.com/LucasNuzzi/status/159012259020682...
In summary:
1. Alameda essentially needed a bailout in the spring.
2. Alameda, though, also had a large chunk of FTT coming due in the fall that was basically part of the vesting schedule of the original FTT ICO.
3. So, FTX lent Alameda customer funds in the spring.
4. In the fall, when the vested FTT paid out to Alameda, they immediately paid it back to FTX.
5. The thing that looks highly suspicious and fraudulent is that SBF tweeted out that the big FTT move that day was just normal "rotation".
Also, particularly interesting to me, the FTX-US president, Brett Harrison, resigned the day before that transaction at the end of September. He also just liked an interview on LinkedIn where Brian Armstrong (Coinbase CEO) was being interviewed, saying "not all crypto companies are like FTX, where it appears they fraudulently misappropriated customer funds".
The above is speculation, but it's based on on-chain data.