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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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18) Truth and Beauty

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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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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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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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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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23) Roughly 25% of customer assets were withdrawn each day--$4b.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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24) Shrapnel

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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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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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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.

10:55 PM · Nov 16, 2022Twitter Web App

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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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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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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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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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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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illi (radioactive arc)

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#followthemoney

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Oh please stop being so condescending. So disingenuous. Give us a break.

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Your lawyer gave you a call, didn't him? Walking the line now.

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Look at you wishing regulators had done your job for you.

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