45 ms·

I think you’re confused about what a liability is. If the liabilities were fake FTX would not be insolvent. Their problem is that their liabilities are real but

I think you’re confused about what a liability is. If the liabilities were fake FTX would not be insolvent. Their problem is that their liabilities are real but their assets are fake.

nullc 4y ago
You might want to consider adopting a less condescending communication style in accordance with HN policy-- it would make it easier for both of us to learn something. I think I adequately described a credible sequence of operations, but your dismissive reply has made it impossible for me to tell which parts weren't communicated effectively. The central unanswered question is "where did the real money go?": Those ftx related magic beans were constructed for ~free. The balance sheet makes it look like billions of Bitcoin are owed, so where did they go? The idea that FTX didn't pay for the magic beans is just an assumption, but it's not necessary. They could have paid a related entity for them using the paper bitcoin traded on the site. I'm suggesting that related entities such as Alameda research and SBF personally deposited magic means and traded them for Bitcoin "perpetuals", with FTX awarding them paper Bitcoins. This creates a bitcoin liability on FTX's balance sheets even though no billions of dollars ever existed. Some amount of actual valuable assets were deposited, then withdrawn by people who traded magic beans for FTX bitcoin liability (and/or were awarded bitcoin through FTX's 8%/yr yield program on customer deposits) -- leaving FTX with a balance sheet full of huge Bitcoin liabilities. In that scenario one could go back through the transaction records and unwind some of these magic bean trades and make FTX less insolvent, but they'd still be insolvent because of the real assets that were withdrawn by parties that only brought magic beans into the picture, as well as FTX's spending, donations, bills for their designer amphetamines and cleanup services for their orgies, and other "business expenses" typical of their industry.

I think you’re confused about what a liability is. If the liabilities were fake FTX would not be insolvent. Their problem is that their liabilities are real but their assets are fake.

nullc 4y ago

You might want to consider adopting a less condescending communication style in accordance with HN policy-- it would make it easier for both of us to learn something. I think I adequately described a credible sequence of operations, but your dismissive reply has made it impossible for me to tell which parts weren't communicated effectively. The central unanswered question is "where did the real money go?": Those ftx related magic beans were constructed for ~free. The balance sheet makes it look like billions of Bitcoin are owed, so where did they go? The idea that FTX didn't pay for the magic beans is just an assumption, but it's not necessary. They could have paid a related entity for them using the paper bitcoin traded on the site. I'm suggesting that related entities such as Alameda research and SBF personally deposited magic means and traded them for Bitcoin "perpetuals", with FTX awarding them paper Bitcoins. This creates a bitcoin liability on FTX's balance sheets even though no billions of dollars ever existed. Some amount of actual valuable assets were deposited, then withdrawn by people who traded magic beans for FTX bitcoin liability (and/or were awarded bitcoin through FTX's 8%/yr yield program on customer deposits) -- leaving FTX with a balance sheet full of huge Bitcoin liabilities. In that scenario one could go back through the transaction records and unwind some of these magic bean trades and make FTX less insolvent, but they'd still be insolvent because of the real assets that were withdrawn by parties that only brought magic beans into the picture, as well as FTX's spending, donations, bills for their designer amphetamines and cleanup services for their orgies, and other "business expenses" typical of their industry.