FTX’s former CEO claims crypto alternate continues to be solvent

Sam Bankman-Fried, the previous chief govt of the collapsed crypto alternate FTX, has claimed the corporate he based continues to be solvent, whilst its new boss, who oversaw the ultimate days of Enron, begins the formal chapter course of.

In a sequence of tweets posted in a single day on Tuesday, Bankman-Fried insisted the corporate had about $9bn (£7.6bn) of belongings, in a combination of semi-liquid and illiquid holdings, whereas owing prospects solely $8bn.

The tweets implicitly double down on his early declare that his firm’s holdings of “serum”, a token FTX controls with a present market cap of $80m, is in reality price $2bn.

Sam Bankman-Fried posted a sequence of Tweets about FTX in a single day. {Photograph}: Saul Loeb/AFP/Getty

“A couple of weeks in the past, FTX was dealing with ~$10bn/day of quantity and billions of transfers,” he wrote. “Right here’s the place issues stand right now, roughly talking,” he mentioned, earlier than saying the corporate had $5.5bn of “semi” liquid belongings and $3.5bn of “illiquid” belongings. “And yeah, perhaps that $9bn illiquid [at market prices] isn’t price $9bn. [On the other hand] – a month in the past it was price $18bn.”

Bankman-Fried acknowledged “you’ve all seen this”, because the numbers he cited had already been revealed in an inner spreadsheet revealed by the Monetary Instances on Saturday, apparently created by Bankman-Fried himself on Thursday 10 November, the identical day he apologised for its enormous collapse in worth earlier within the week.

Nevertheless, that spreadsheet additionally advised a number of the “much less liquid” $5.5bn might show onerous to show into money for the corporate’s collectors. Greater than $2bn of the belongings the corporate holds are in a crypto token referred to as serum, the underlying token of a decentralised alternate launched by FTX in 2021.

Regardless of valuing its holdings of the token at $2.2bn, and claiming they have been price greater than $5bn just a few weeks earlier, the full implied market capitalisation of all freely buying and selling serum is just $80m. It might be onerous for FTX or its collectors to promote 25 occasions extra serum than had ever beforehand been traded at wherever close to the present market value, or in any respect.

Serum’s market worth can be carefully tied to the fortunes of FTX. Though the serum alternate is “decentralised”, it’s in sensible phrases managed by FTX, which holds the overwhelming majority of governance tokens and the precise to mint new ones – a proper it has already exercised twice previously.

Regardless of being ousted because the chief govt, Bankman-Fried continues to attempt to increase capital for a rescue package deal for the alternate. “What can I attempt to do? Elevate liquidity, make prospects entire, and restart. Possibly I’ll fail. Possibly I received’t get something extra for purchasers than what’s already there,” he mentioned.

“I’ve definitely failed earlier than. You all know that now, all too nicely. However all I can do is to strive. I’ve failed sufficient for the month. And a part of me thinks I would get someplace.”

The broader fallout of the collapse of FTX is ongoing. On Monday, the crypto alternate BlockFi warned prospects it had “vital publicity to FTX” as a consequence of loans to the group and belongings held on the alternate, and on Tuesday reportedly started planning a wave of layoffs and a possible chapter submitting.

On Wednesday, the crypto alternate Genesis “made the tough choice to briefly droop redemptions” from the corporate’s lending enterprise after a sequence of withdrawals from the service. Genesis mentioned the reason for the withdrawal freeze was a liquidity crunch.

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