Batik cryptocurrency Sam Bankman-Fried, former CEO of the stock exchange FTX, added new ones to a long thread of tweets he made on Twitter.
Sam Bankman-Fried, oddly enough, in his previous tweets, one by one, “What Happened?” had written. He then claimed that he would explain what happened later, claiming that his companies actually had more assets than liabilities, but had liquidity problems.
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.
— SBF (@SBF_FTX) November 16, 2022
As the latest development, SBF wrote on Twitter:
“Once, a month or so ago, FTX was a valuable enterprise.
FTX’s daily volume was around $10-15 billion and annual revenue was around $1 billion. It had an equity value of $40 billion.
And we were seen as examples of effective corporate management.
I was on the cover of every magazine, and FTX was Silicon Valley’s favorite.
We were overconfident and careless.
And problems began to arise. Bigger than I realized.
(I SAY AGAIN, THESE NUMBERS ARE APPROXIMATE, AS SO MUCH AS I KNOW, ETC.]
Leverages have been created, about $5 billion in leverage…. It was backed by assets of approximately $20 billion.
They had values. FTT had a value as Business Value! But it also had risks.
And that risk was associated with other collateral and platform.
And then came the collapse.
Within days, most correlated assets had a historic collapse of over 50% and there was no liquidity on the supply side.
There was also a big bank run.”
About 25% of client assets, or $4 billion, were withdrawn every day.
As it turns out, I was wrong: leverage was ~$13 billion, not ~$5 billion.
$13 billion in leverage, a big bank run, a total collapse of asset value, all at once.
That’s why you don’t want to use leverage.”
FTX CEO ended his words with the mysterious word “Shrapnel”.
*Not investment advice.