Tuesday, 21 Mar 2023

FTXs former CEO claims crypto exchange is still solvent

FTXs former CEO claims crypto exchange is still solvent

FTXs former CEO claims crypto exchange is still solvent

Sam Bankman-Fried, the former chief executive of the collapsed crypto exchange FTX, has claimed the company he founded is still solvent, even as its new boss, who oversaw the final days of Enron, begins the formal bankruptcy process.

In a series of tweets posted overnight on Tuesday, Bankman-Fried insisted the company had about $9bn (£7.6bn) of assets, in a mixture of semi-liquid and illiquid holdings, while owing customers only $8bn.

The tweets implicitly double down on his early claim that his company's holdings of "serum", a token FTX controls with a current market cap of $80m, is in fact worth $2bn.

"A few weeks ago, FTX was handling ~$10bn/day of volume and billions of transfers," he wrote. "Here's where things stand today, roughly speaking," he said, before saying the company had $5.5bn of "semi" liquid assets and $3.5bn of "illiquid" assets. "And yeah, maybe that $9bn illiquid [at market prices] isn't worth $9bn. [On the other hand] - a month ago it was worth $18bn."

Bankman-Fried acknowledged "you've all seen this", since the numbers he cited had already been revealed in an internal spreadsheet published by the Financial Times on Saturday, apparently created by Bankman-Fried himself on Thursday 10 November, the same day he apologised for its huge collapse in value earlier in the week.

However, that spreadsheet also suggested some of the "less liquid" $5.5bn could prove hard to turn into cash for the company's creditors. More than $2bn of the assets the company holds are in a crypto token called serum, the underlying token of a decentralised exchange launched by FTX in 2021.

Despite valuing its holdings of the token at $2.2bn, and claiming they were worth more than $5bn only a few weeks earlier, the total implied market capitalisation of all freely trading serum is only $80m. It would be hard for FTX or its creditors to sell 25 times more serum than had ever previously been traded at anywhere near the current market price, or at all.

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