Conversation

SBF
@SBF_FTX
10) [NOT LEGAL ADVICE. NOT FINANCIAL ADVICE. THIS IS ALL AS I REMEMBER IT, BUT MY MEMORY MIGHT BE FAULTY IN PARTS.]
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SBF
@SBF_FTX
11) I'll get to what happened. But for now, let's talk about where we are today.
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SBF
@SBF_FTX
12) To the best of my knowledge, as of post-11/7, with the potential for errors: a) Alameda had more assets than liabilities M2M (but not liquid!) b) Alameda had margin position on FTX Intl c) FTX US had enough to repay all customers Not everyone necessarily agrees with this
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SBF
@SBF_FTX
13) My goal—my one goal—is to do right by customers. I’m contributing what I can to doing so. I’m meeting in-person with regulators and working with the teams to do what we can for customers. And after that, investors. But first, customers.
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SBF
@SBF_FTX
14) My goal: a) Clean up and focus on transparency b) Make customers whole
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SBF
@SBF_FTX
15) A few weeks ago, FTX was handling ~$10b/day of volume and billions of transfers. But there was too much leverage--more than I realized. A run on the bank and market crash exhausted liquidity. So what can I try to do? Raise liquidity, make customers whole, and restart.
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@SBF_FTX
Replying to
@SBF_FTX
17) I know you've all seen this, but here's where things stand today, roughly speaking. [LOTS OF CAVEATS, ETC.] Liquid: -$8b Semi: +$5.5b Illiquid: +$3.5b And yeah, maybe that $9b illiquid M2M isn't worth $9b (+$1b net). OTOH--a month ago it was worth $18b; +$10b net. ---
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SBF
@SBF_FTX
19) Once upon a time--a month ago--FTX was a valuable enterprise. FTX had ~$10-15b of daily volume, and roughly $1b of annual revenue. $40b of equity value. And we were held as paragons of running an effective company.
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SBF
@SBF_FTX
20) I was on the cover of every magazine, and FTX was the darling of Silicon Valley. We got overconfident and careless.
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SBF
@SBF_FTX
21) And problems were brewing. Larger than I realized. [AGAIN THESE NUMBERS ARE APPROXIMATE, TO THE BEST OF MY KNOWLEDGE, ETC.] Leverage built up-- ~$5b of leverage, backed by ~$20b of assets which were.... Well, they had value. FTT had value, in EV! But they had risk.
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@SBF_FTX
22) And that risk was correlated--with the other collateral, and with the platform. And then the crash came. In a few day period, there was a historic crash--over 50% in most correlated assets, with no bid side liquidity. And at the same time there was a run on the bank.
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SBF
@SBF_FTX
23) Roughly 25% of customer assets were withdrawn each day--$4b. As it turned out, I was wrong: leverage wasn't ~$5b, it was ~$13b. $13b leverage, total run on the bank, total collapse in asset value, all at once. Which is why you don't want that leverage. ---
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SBF
@SBF_FTX
25) Last night I talked to a friend of mine. They published my messages. Those were not intended to be public, but I guess they are now.
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SBF
@SBF_FTX
26) Well, that gives some color, I guess. It sucks. I'm really sorry that things ended up as they did. And as I said--I'm going to do everything I can to make it more right.
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SBF
@SBF_FTX
27) A few thoughts: a) It's *really* hard to be a regulator. They have an impossible job: to regulate entire industries that grow faster than their mandate allows them to. And so often they end up mostly unable to police as well as they ideally would.
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SBF
@SBF_FTX
28) Even so, there are regulators who have deeply impressed me with their knowledge and thoughtfulness. The CFTC has; the SCB, and VARA, too. And others, scattered. But most are overwhelmed.
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SBF
@SBF_FTX
29) Which means that interacting with regulatory structures can be really frustrating: a *huge* amount of work--much of it arbitrary--and relatively little customer protection. Fuck that. You all deserve frameworks that let regulators protect customers while allowing freedom.
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SBF
@SBF_FTX
30) (Some of what I said was thoughtless or overly strong--I was venting and not intending that to be public. I guess at this point what I write leaks anyway.)
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SBF
@SBF_FTX
31) And in the future, I'm going to care less about the dumb, contentless, "good actor" framework. What matters is what you do--is *actually* doing good or bad, not just *talking* about doing good or *using ESG language*.
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@SBF_FTX
32) Anyway -- none of that matters now. What matters is doing the best I can. And doing everything I can for FTX's customers.
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