Conversation

SBF
@SBF_FTX
Replying to
@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
@SBF_FTX
16) Maybe I'll fail. Maybe I won't get anything more for customers than what's already there. I've certainly failed before. You all know that now, all too well. But all I can do is to try. I've failed enough for the month. And part of me thinks I might get somewhere.
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SBF
@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
@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23) Roughly 25% of customer assets were withdrawn each day--$4b.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
Replying to
@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
@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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