TechFlow news — SBF posted that by mid-November, FTX International was technically insolvent. Three factors combined led to the implosion:
1. During 2021, Alameda’s balance sheet grew to approximately $100 billion in net assets, $8 billion in net borrowings (leverage), and $7 billion in liquidity on hand.
2. Alameda failed to adequately hedge its market risks. Throughout 2022, a series of major broad market crashes occurred in equities and crypto, causing the market value of its assets to decline by roughly 80%.
3. In November 2022, an extreme, rapid, targeted crash orchestrated by the CEO of Binance rendered Alameda insolvent.
Then the contagion from Alameda spread to FTX and beyond, similar to how 3AC eventually affected Voyager, Genesis, Celsius, BlockFi, Gemini, and others.
FTX US remains fully solvent and should be able to return all customer funds.
Additionally, SBF clarified in detail that there was no theft or hiding of billions of dollars. FTX International and Alameda were both legal, independently profitable businesses in 2021, each earning billions of dollars.Original link
