FTX Owes Lots Of (Actual, Real) Money To Lots Of People

FTX owes a lot of real money to a lot of people who, thanks to recent events, likely won't be accepting any sort of tokens to settle their claims. Last week, a filing suggested Sam Bankman-Fried's collapsed pyramid may have more than a million creditors in bankruptcy. Over the weekend, new court papers showed FTX and associated entities owe their largest unsecured creditors more than $3 billion. They weren't named, but were all identified as customers. The largest unsecured claim is $226,280,

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8 thoughts on “FTX Owes Lots Of (Actual, Real) Money To Lots Of People

  1. Finally looked at Friday’s FT only to be greeted with a front-page article proclaiming, “Son owes SoftBank $ 4.7bn after value of his stake in Vision Fund 2 collapses.”

    So it’s not just some silly crypto players racking up major losses. In this case, the FT suggests that “the world’s biggest tech investor was hammered by plunging tech stocks and valuations in private companies over the past year.”

    Plunging values “in private companies over the past year.” Once one big holder writes down the value of their stake in a private equity or credit vehicle, it’s hard for other holders to continue to pretend there has been no diminution of the value of their holdings.

    No problem for the Taylor Rule fans until/unless those managers need to raise money to meet margin calls and/or redemption notices. What can they sell? Probably more their liquid investments because of the egregious discounts potential buyers would demand for the private positions.

  2. This is what I find is the scariest part of this whole story:

    “‘As far as I can tell, the extent of the [due] diligence was ‘The kid went to MIT, talks fast [and] sleeps on a beanbag chair,’” Walsh said

    Maybe Walsh was referring to Sequoia Capital, Softbank, Tiger and BlackRock. Then Ontario Teachers Pension Plan came along and thought, “we don’t need to do any due diligence because if FTX was good enough for Sequoia, then we are “in”! And so on.

    Then, by the time an “ordinary” person did transactions with FTX, such ordinary person said to themselves “what could go wrong, given the reputation of the big name investors?”

    And here is where it gets even scarier (for those invested in crypto), the due diligence dude at Sequoia was also doing the due diligence on all crypto investments. The next few weeks should be informative.

  3. H, can you write an article entitled “How To Talk To Your Uncle This Thanksgiving After You Convinced Him To Buy $100,000 Worth of Bitcoins Last Thanksgiving” ?

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