Disgraced FTX founder Sam Bankman-Fried still sees a path to rebuilding his bankrupt empire and believes he can make his clients whole
FTX’s disgraced founder, Sam Bankman-Fried, believes there’s enough value locked up on the exchange’s balance sheet to return shackled customer deposits and rebuild the money empire its dying electronics.
In a tweet thread suggesting that the 30-year-old considers himself a short-lived hero, self-proclaimed altruism said he still has hope for a future for FTX after bankruptcy.
“What can I try to do? Increase liquidity, go full client and restart,” he wrote on Tuesday to his 1 million followers on Facebook. Twitter. “All I can do is try. I’ve failed enough in the past month, and a part of me thinks I can achieve something.”
16) Maybe I'll fail. Maybe I won't get anything more for customers than what's already there.
I've certainly failed before. You all know that now, all too well.
But all I can do is to try. I've failed enough for the month.
And part of me thinks I might get somewhere.
— SBF (@SBF_FTX) November 16, 2022
For the first time since FTX and more than 130 of its subsidiaries filed for bankruptcy last Friday, Bankman-Fried has released specific numbers regarding the quality of its balance sheet.
He claims the group still owns $9 billion worth of assets at current prices after they were “marked as put on the market” — half of what they were worth a month ago. This matches the cash obligations it needs to meet of $8 billion.
Good news?
In theory, that could be seen as good news for customers, as it shows that the hot air on the balance sheet has largely subsided, leaving a firmer foundation to operate on. Even with their value falling over the past few weeks, there still seems to be a net $1 billion worth of assets that could be liquidated.
The problem is that according to Bankman-Fried’s own accounts, $3.5 billion of the company’s total assets are illiquid, meaning they cannot be easily converted to cash to satisfy the claim. . These can be anything from owned assets to exotic tailor-made derivatives contracts that are rarely traded and difficult to value.
That said, it’s unclear how meaningful what Bankman-Fried posted on social media ultimately means. He no longer holds the position of CEO and his company is now in the hands of John J. Ray III, who has managed the orderly dissolution of Enron on behalf of its stakeholders.
Second, Bankman-Fried denied last week that Alameda Research—his crypto hedge fund is famous for mining so-called “Premium kimchi“Bitcoin arbitrage opportunity—participated in”any strange thing” he saw on Twitter.
Press Release pic.twitter.com/rgxq3QSBqm
— FTX (@FTX_Official) November 11, 2022
In fact, Alameda was the source of FTX’s bankruptcy, borrowing money from customers later to fund speculative crypto bets that went awry. The The Wall Street Journal reported that Bankman-Fried and Alameda CEO Caroline Ellison, who were once romantically involved, had hide this internally.
‘Pretty disgusting’
His empire collapsed spectacularly last week after Binance withdraw its support following revelations earlier this month that Alameda, one of FTX’s major market makers and business partners, is conceal solvency.
Binance founder, Changpeng Zhao, said he will sell all of the FTX native tokens he holds, which he received after exiting his investment in a rival exchange. This prompted a wave of customer withdrawals that Bankman-Fried quantified as hitting about 5 billion dollars only last Sunday.
The failure of FTX has been likened to the 2008 bankruptcy of the Wall Street investment bank Lehman Brothers as well as the Ponzi scheme carried out by Bernie Madoff.
Bankman-Fried even fooled some savvy financial investors, including Singapore sovereign wealth fund Temasek and Sequoia Capital, which at the end of September endorsed its “savior complex” in a flattering profile. since it was taken down. Meanwhile, Bankman-Fried’s multibillion-dollar fortune has gone up in smoke, and is now largely comprised of his fortune. More than 7% stake in Robinhood trading app.
Unfortunately, I have some pretty bad news to share. Last week Ikigai was caught up in the FTX collapse. We had a large majority of the hedge fund’s total assets on FTX. By the time we went to withdraw Monday mrng, we got very little out. We’re now stuck alongside everyone else.
— Travis Kling (@Travis_Kling) November 14, 2022
Despite being intentionally incorporated in Antigua and Barbuda, Bankman-Fried’s offshore cryptocurrency exchange is currently seeking protection from creditors under Chapter 11 of the US bankruptcy code.
This process allows a company to reorganize its capital structure with the goal of cleaning up its balance sheet. This often involves removing shareholders in the process, while ultimately agreeing with lenders to swap their debts for equity.
This could still see a leaner, healthier FTX emerge someday post-bankruptcy, although it is highly unlikely that it will be trusted by the market again.
On Monday, Travis Kling, chief investment officer of crypto hedge fund Ikigai Asset Management, wrote a harsh, scathing criticism of Bankman-Fried after his investors’ funds were stolen. stuck on the exchange.
“I am quite disgusted with space in general and humanity in general,” he wrote.
This story was originally featured on Fortune.com
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