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The definition of insolvency is not being able to pay your debts. Alameda claims $14.6B in assets vs $8B debts, which means they're solvent. If they actually
by rippercushions 4y ago
The definition of insolvency is not being able to pay your debts. Alameda claims $14.6B in assets vs $8B debts, which means they're solvent. If they actually only have 12% of $14.6 = $1.8B, they're way mucho insolvent.
- LatteLazy 4y agoOnly the 5.8bn in FTT is being claimed to be worthless. Not the full 14.6bn in assets. If that's true (and the article itself lists reasons it isn't true!?), that still leaves 8.8bn in other assets, vs 8.0bn in debts. The article itself says the same when it says 88% of equity. Equity is assets less debts. So as long as they have any equity left at all, they're not insolvent.
- adamsmith143 4y agoYou assume that during a firesale they would actually get value approaching what they claim is worth 14.6B. Since FTX and Alamaeda are by far the largest holders of FTT and significant holders of Solana they will destroy the market for both if they had to sell. It's likely the real value of their assets is far lower, as the other commenter suggested.
- LatteLazy 4y agoI'm just taking the numbers from the article itself and the assumption that FTT specifically is worthless (extreme enough on it's own). If you assume a fire-sale on everything, then everyone is insolvent all the time...
- rippercushions 4y agoA fire-sale of (say) a skyscraper in Manhattan is a very different proposition to a fire-sale of random shitcoins.
- LatteLazy 4y agoThat really depends. Most buildings are financed with mortgages, so if there is a real estate crash then they can actually have negative values, even after only a small price drop. Even FTT coins can only be worth zero. This is one of the unexpected dangers of "safe" assets: people will lend on safe assets, so fund managers leverage up until they're not safe anymore and you get 2008 type issues. Ultimately all of this is pretty standard for Hedge/Investment funds. If you want safe, diversified, limited downside investments, get an few index funds. The minute you go to a hedge fund you're asking for risk whether the underlying is questionable crypto or US Treasuries...
- adamsmith143 4y agoGiven today's news I just want to say lol. FTT down 58% and the real fire sale hasn't even begun. Alameda is doomed and will fall next.