FTX’s liquid asset reserves are only $900 million, while its liabilities are estimated at about $9 billion. This follows from an investor presentation prepared by the cryptocurrency exchange before filing for bankruptcy, writes Bloomberg.
According to the document, $3.2 billion was held in illiquid assets, $5.5 billion — in less liquid assets.
Bloomberg also noted an unauthorized withdrawal of assets from platform amounting to $477 million, according to Elliptic. This will also affect the size of the potential amount of funds subject to restitution to customers.
The report also mentioned a -$8 billion on a “hidden, poorly marked” fiat account and withdrawals by users of $5 billion as of November 6.
“There were many things I would have done differently. The biggest — a poorly indicated internal bank account and the size of withdrawals by customers during the bank examination,” — says in the explanatory note.
According to the agency’s source, the balance sheet is incomplete and lacks detail.
FTX’s assets consisted of:
- SRM — valued at $2.2 billion;
- SOL — $982 million;
- MAPS — $616 million;
- FTT — $554 million;
- Robinhood shares — $472 million.
Journalists noted that in the following days the token prices fell sharply.
Robinhood shares rose, but they sit on Emergent Fidelity’s balance sheet. The firm did not appear on the list of Chapter 11 bankruptcy filings by 11 entities linked to FTX head Sam Bankman-Fried.
Ming Zhao, formerly at Point72 Ventures, explained that FTX customers would stand third in line to receive funds after senior creditors and platform employees. This could take from 6 to 24 months.
5/ What about FTX customers? What about VCs?
Do they get paid before or after all other FTX creditors?
Short story is it’s yet unclear but most likely:
— first all the senior corporate creditors get paid
— then FTX employees
— then FTX customers
— then VCs
— then the founders— Ming Zhao (@FabiusMercurius) November 12, 2022
Under Chapter 11 the business may continue operating and have a chance at restoring solvency. However, the process will take time and money.
7/ Pros & Cons of Chapter 11
Most companies first try to emerge from 11 alive.
If they fail, they resort to 7.Pros:
— business can continue to operate during process
— possible 2nd chance
— creditors must stop harassing execs during «automatic stay» periodCons:
— time
— cost— Ming Zhao (@FabiusMercurius) November 12, 2022
As reported in Bloomberg and WSJ, there was an $8 billion hole in FTX’s balance sheet. Reuters quoted a larger figure — $9.4 billion.
Insider sources at The Wall Street Journal said Bankman-Fried acknowledged a debt of Alameda Research to FTX amounting to $10 billion.
Read ForkLog’s bitcoin news on our Telegram — cryptocurrency news, prices and analysis.