FTX held less than $1B in liquid assets against $9B in liabilities
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Re: FTX held less than $1B in liquid assets against $9B in liabilities
#2Re: FTX held less than $1B in liquid assets against $9B in liabilities
#3Re: FTX held less than $1B in liquid assets against $9B in liabilities
#4Is this normal? I would assume that no bank has 100% liquid assets against liabilities (same as stuffing all your money under your mattress.) So what is the "right" ratio for an exchange? Close to 100% since you are not supposed to invest an exchange's money?
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#5Is this normal? I would assume that no bank has 100% liquid assets against liabilities (same as stuffing all your money under your mattress.) So what is the "right" ratio for an exchange? Close to 100% since you are not supposed to invest an exchange's money?
Matt Levine has an excellent overview of the liquidity / solvency question: https://www.bloomberg.com/opinion/articles/2022-11-10/ftx-is...
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#6Is this normal? I would assume that no bank has 100% liquid assets against liabilities (same as stuffing all your money under your mattress.) So what is the "right" ratio for an exchange? Close to 100% since you are not supposed to invest an exchange's money?
I think with cryptocurrencies we need to consider the sheer speed at which mass transactions can occur, and 24/7 to boot.
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#7It was all for charity.
People are mean.
https://twitter.com/The_Prologuist/status/158967849854920704...
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#8Is this normal? I would assume that no bank has 100% liquid assets against liabilities (same as stuffing all your money under your mattress.) So what is the "right" ratio for an exchange? Close to 100% since you are not supposed to invest an exchange's money?
Yes, exactly. The liabilities number includes all on-exchange customer deposits and funds, which it should be theoretically possible to redeem in full at any time.
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#9Is this normal? I would assume that no bank has 100% liquid assets against liabilities (same as stuffing all your money under your mattress.) So what is the "right" ratio for an exchange? Close to 100% since you are not supposed to invest an exchange's money?
Fractional reserves exist in finance and are held in various assets that can be hedged and also redeemed. Based on the liabilities that FTX revealed like funding Alameda for their investments in un-hegable bets like “Donald Trump losing” is not normal where they could never get those funds back if there was a bank run.
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#10> In all, the spreadsheet says FTX Trading’s assets were $900mn of “liquid” assets, $5.5bn of “less liquid” assets consisting of crypto tokens
Aren't tokens supposed to be "liquid" or is this a different way of saying the tokens are worthless?