Home / Dashcoin News /FTX Debtors Reveal $6.8 Billion Hole In Balance Sheet Amidst Financial Discrepancies And Payments To Insiders

FTX Debtors Reveal $6.8 Billion Hole In Balance Sheet Amidst Financial Discrepancies And Payments To Insiders

18 Mar 2023

Amidst the chaos in the U.S. banking sector, Elon Musk, the CEO of Tesla and owner of Twitter, has been critical of the country’s central bank. Musk insists that the U.S. Federal Reserve is operating with “way too much latency in their data,” and he insists that the central bank needs to drop the federal funds rate “immediately.”

In the last week, three major U.S. banks collapsed, First Republic Bank was bailed out, and Credit Suisse received 50 billion Swiss francs from the Swiss National Bank. Just last week, the U.S. Federal Reserve lent the banks $164.8 billion to shore up liquidity. Despite all the bailouts and the expectation of the central bank injecting up to $2 trillion in liquidity after the creation of the Bank Term Funding Program (BTFP), the banking industry is still not out of the woods. A recently published study shows that 186 U.S. banking institutions are suffering from the same risks that caused Silicon Valley Bank’s failure.

pic.twitter.com/AoIYifFivh

— Elon Musk (@elonmusk) March 17, 2023

On Twitter, Elon Musk, the CEO of Tesla, has been critical of the Federal Reserve, with his recent commentary very similar to the statements he made last December. At that time, Musk warned that if the central bank raised the benchmark rate in December, the risk of a recession would be greatly amplified. After the Fed raised the rate by 50 basis points, Musk reiterated his position and said, “At the risk of being repetitive, these Fed rate increases might go down in history as the most damaging ever.” In the last week, Musk has once again criticized the U.S. central bank in a number of viral tweets.

After computer scientist and essayist Paul Graham shared an article about banking issues in the U.S. published by the Washington Post, Elon Musk responded to Graham’s tweet. “FDIC needs to change to unlimited coverage to stop bank runs and Treasury needs to stop issuing ridiculously high-yield bills, such that it makes no sense to have money in a low-interest-rate bank ‘savings’ account. Right now,” Musk tweeted. In another tweet about the small handful of U.S. bank collapses, Musk insisted that the U.S. central bank is too slow with its data, saying:

The Fed is operating with way too much latency in their data. Rates need to drop immediately.

Musk’s commentary about the Treasury bonds refers to the long-maturity bills affected by the Fed’s monetary tightening policy. The study about the 186 banks suffering from similar financial issues highlights the fact that 10- to 20-year and 20+ year Treasury bonds have lost roughly 25% to 30% of their market value. “Overall, as is evident, the Fed’s monetary policy tightening caused significant value declines in long-duration assets,” the study explains.

Musk has continuously called out the Fed’s swift rate-hike campaign. On January 13, 2023, Musk tweeted about the Fed and asked what would have happened in 2009 if the Fed had raised rates instead of lowering them. In a follow-up tweet, Musk added, “The higher the rates, the harder the fall.”

What are your thoughts on Elon Musk’s criticism of the U.S. Federal Reserve’s monetary policy? Do you agree with his stance or do you have a different perspective? Share your insights in the comments section below.

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Today's Top Ethereum and Bitcoin Mining Devices Continue to Rake in Profits

As the crypto economy hovers just under $2 trillion in value, application-specific integrated circuit (ASIC) mining devices are making decent profits. While ASIC miners can still mine ethereum, a 1.5 gigahash (GH/s) Ethash mining device can rake in $51.58 per ... read more.

Amidst the chaos in the U.S. banking sector, Elon Musk, the CEO of Tesla and owner of Twitter, has been critical of the country’s central bank. Musk insists that the U.S. Federal Reserve is operating with “way too much latency in their data,” and he insists that the central bank needs to drop the federal funds rate “immediately.”

In the last week, three major U.S. banks collapsed, First Republic Bank was bailed out, and Credit Suisse received 50 billion Swiss francs from the Swiss National Bank. Just last week, the U.S. Federal Reserve lent the banks $164.8 billion to shore up liquidity. Despite all the bailouts and the expectation of the central bank injecting up to $2 trillion in liquidity after the creation of the Bank Term Funding Program (BTFP), the banking industry is still not out of the woods. A recently published study shows that 186 U.S. banking institutions are suffering from the same risks that caused Silicon Valley Bank’s failure.

pic.twitter.com/AoIYifFivh

— Elon Musk (@elonmusk) March 17, 2023

On Twitter, Elon Musk, the CEO of Tesla, has been critical of the Federal Reserve, with his recent commentary very similar to the statements he made last December. At that time, Musk warned that if the central bank raised the benchmark rate in December, the risk of a recession would be greatly amplified. After the Fed raised the rate by 50 basis points, Musk reiterated his position and said, “At the risk of being repetitive, these Fed rate increases might go down in history as the most damaging ever.” In the last week, Musk has once again criticized the U.S. central bank in a number of viral tweets.

After computer scientist and essayist Paul Graham shared an article about banking issues in the U.S. published by the Washington Post, Elon Musk responded to Graham’s tweet. “FDIC needs to change to unlimited coverage to stop bank runs and Treasury needs to stop issuing ridiculously high-yield bills, such that it makes no sense to have money in a low-interest-rate bank ‘savings’ account. Right now,” Musk tweeted. In another tweet about the small handful of U.S. bank collapses, Musk insisted that the U.S. central bank is too slow with its data, saying:

The Fed is operating with way too much latency in their data. Rates need to drop immediately.

Musk’s commentary about the Treasury bonds refers to the long-maturity bills affected by the Fed’s monetary tightening policy. The study about the 186 banks suffering from similar financial issues highlights the fact that 10- to 20-year and 20+ year Treasury bonds have lost roughly 25% to 30% of their market value. “Overall, as is evident, the Fed’s monetary policy tightening caused significant value declines in long-duration assets,” the study explains.

Musk has continuously called out the Fed’s swift rate-hike campaign. On January 13, 2023, Musk tweeted about the Fed and asked what would have happened in 2009 if the Fed had raised rates instead of lowering them. In a follow-up tweet, Musk added, “The higher the rates, the harder the fall.”

What are your thoughts on Elon Musk’s criticism of the U.S. Federal Reserve’s monetary policy? Do you agree with his stance or do you have a different perspective? Share your insights in the comments section below.

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Today's Top Ethereum and Bitcoin Mining Devices Continue to Rake in Profits

As the crypto economy hovers just under $2 trillion in value, application-specific integrated circuit (ASIC) mining devices are making decent profits. While ASIC miners can still mine ethereum, a 1.5 gigahash (GH/s) Ethash mining device can rake in $51.58 per ... read more.

According to a presentation recently submitted by the FTX debtors on March 16, Sam Bankman-Fried’s companies had a $6.8 billion hole in their intercompany balance sheet when they filed for Chapter 11 bankruptcy protection. FTX and its conglomerate of firms have debts of around $11.6 billion, including customer claims and various other liabilities.

The FTX debtors have released a third presentation that provides an overview of FTX’s debts and liabilities. The presentation reveals that, while a significant amount of money is owed to customers, FTX and its few subsidiary firms also owe funds to certain vendors, counterparties, and unpaid invoices. Some of the vendors include Margaritaville Beach Resort owned by Jimmy Buffett, Amazon Web Services (AWS), Fairview Asset Management, Stripe, Meta, Trulioo, Spotify, Turner Network Television, and American Express.

Advisers concluded that when FTX filed for bankruptcy, the more than 100 companies under its umbrella had a $6.8 billion gap in their balance sheet. Approximately $4.8 billion of this amount is against a colossal $11.6 billion, according to the presentation. FTX US had a shortfall of about $87 million, despite Bankman Fried’s repeated claims that the U.S. subsidiary was solvent. The disgraced FTX co-founder’s quantitative trading firm, Alameda Research, held the “vast majority of third-party loans,” according to the advisers’ notes.

FTX Debtors Reveal $6.8 Billion Hole in Balance Sheet Amidst Financial Discrepancies and Payments to Insiders

Alameda had an interesting relationship with many entities and protocols, as it borrowed from “approximately 80 different counterparties.” Furthermore, much of the collateral was based in FTT, SRM, and SOL, and crypto asset volatility “resulted in many lenders issuing margin calls and call notices.” FTX debtors reviewed internal communications, onchain activity, and loan documents and discovered that loans were not recorded in FTX’s historical accounting records. “Additional tracing of wallet and blockchain activity remains an ongoing matter,” the advisers explained.

Forty-nine companies are ghost towns, identified as “dormant” because they have no historical payments or financial information. Advisers say nine FTX entities provided their payment records directly, and 12 FTX entities in Europe and Asia did the same. About 30 of the FTX entities used Quickbooks to keep operational books and records. Regarding political donations, “payments identified on [Federal Election Commission] website that were not classified as donations on the debtors’ books and records,” the presentation notes.

Additionally, a page called “payments to insiders” shows Bankman-Fried was paid roughly $2.247 billion. Former FTX director of engineering Nishad Singh reportedly received $587 million, and FTX co-founder Gary Wang earned $246 million. Former FTX co-CEO Ryan Salame allegedly received $87 million, and Sam Trabucco made $25 million, according to FTX debtors. The former Alameda CEO, Caroline Ellison, received $6 million in payments and loans, as detailed in the payments to insiders spreadsheet.

FTX Debtors Reveal $6.8 Billion Hole in Balance Sheet Amidst Financial Discrepancies and Payments to Insiders

Overall, FTX debtors discovered major financial and accounting discrepancies within the company, along with substantial payments made to insiders. The situation is opaque, but it’s evident that FTX’s financial problems are more extensive than initially reported. The presentation notes that the financial data was not audited and is subject to change as the bankruptcy proceedings continue.

What do you think this means for the future of FTX and its subsidiaries? Share your thoughts and insights in the comments below.

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Australia to List Bitcoin ETF After 4 Clearinghouse Participants Commit to Meet Stringent Margin Terms

Australia is set to get its first bitcoin exchange-traded fund (ETF) after a report suggested the country's clearinghouse, ASX Clear, confirmed that four market participants agreed to meet its stringent margin requirements. ASX Clear's Margin Requirements An Australian clearinghouse controlling ... read more.

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