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SBF breaks down how Alameda’s balance sheet collapsed throughout 2022 until it ended up declaring the commercial company insolvent.
Sam Bankman-Fried (SBF) has released a written statement detailing his version of the bankruptcy of FTX and Alameda Research, including estimates of each company’s financials before it occurred.
The former CEO argues that FTX could have paid back its clients “substantially whole” in a few weeks, had it not been pressured into bankruptcy.
autopsy
The document, titled “FTX Pre-Mortem Overview,” began by attributing the Alameda collapse to three causes. These included a large and mostly illiquid asset stack, a failure to hedge its exposure during the bear market and Binance CEO Changpeng Zhao (CZ)’s tweet in early November.
Specifically, as of early 2022, SBF believes that Alameda held about $100 billion in net asset value, only 7% of which was considered “liquid.” On November 10, however, the firm had only $11 billion left in assets – only $3 billion of which were “liquid” – and a net asset value of $0.
This triggered a wave of contagion comparable to the Three Arrows Capital bankruptcy in June, much of which was felt at FTX due to Alameda’s large margin position on the platform. However, Bankman-Fried claimed that FTX still held $8 billion in “floating liquid” assets before stepping down as CEO.
In addition, another $4 billion of potential support had been put forward by other groups in the form of signed letters of intent, though he believes FTX’s new management has abandoned these avenues.
“Even now, I think if FTX International were to restart, there would be a real chance that clients would recover substantially,” he said.
fraud accusations
SBF has been widely accused of committing fraud and theft along with Alameda Research by mixing the assets of FTX users with Alameda trading funds. FTX’s new CEO John Ray made the same statement before Congress in December, while MicroStrategy CEO Michael Saylor has made the same claim on multiple podcasts.
However, SBF denies such claims. “I didn’t steal funds and I certainly didn’t hide billions,” he said.
In 2022, Alameda accounted for about 2% of the trading volume on FTX, a figure well below that of previous years.
According to Bankman-Fried, Alameda would have survived past November were it not for CZ and Binance’s “extremely effective months-long PR campaign against FTX.”
Alameda CEO Caroline Ellison and FTX co-founder Gary Wang have pleaded guilty to defrauding FTX investors in conjunction with Bankman-Fried.
