FTX Bankruptcy Filing: I Can’t Believe What I’m Reading!!

It’s been two weeks since FTX and Alameda research collapsed and yet we Are still only just starting to Understand what happened and what the Effects on all of cryptocurrency could Be one of the biggest Bombshells so far Has been ftx’s bankruptcy filing from Last Thursday what it reveals about the Crypto exchange is downright disturbing And foreshadows further grave issues for Crypto today I’m going to give you a Summary of ftx’s bankruptcy filing tell You what it says in simple terms and Explain exactly how it could affect the Crypto Market Okay let’s get straight into it ftx’s Bankruptcy filing begins with a Declaration from the exchange’s new CEO John J Ray III now there is a name For context Sam bankman freed stepped Down as CEO of FTX when FTX and its Sister company Alameda research declared Bankruptcy on the 11th of November you Should also know that John is famous for Being the CEO in charge of overseeing The bankruptcy of American Energy Company Enron John has also worked on Other high-profile bankruptcies such as Nortel his involvement in the FTX Bankruptcy therefore underscores how Serious the situation is Now John starts by saying that he was Appointed CEO of FTX in the quote early Morning hours of the 11th of November

And his first order of business was to File for bankruptcy his second order of Business was to work with blockchain Analytics firms regulators and law Enforcement to identify ftx’s assets John then bluntly States quote Never in my career have I seen such a Complete failure of corporate controls And such a complete absence of Trustworthy financial information has Occurred here this statement made the Headlines in both the crypto and Mainstream Medias John goes on to explain that the chapter 11 bankruptcy filing by FTX has five Objectives implementation of controls I.E set up new procedures in the company Asset protection and Recovery Transparency and investigation of Sam Bankman freed efficiency and Coordination with Regulators law Enforcement Etc And the maximalization of value I.E Compensating those affected as best as Possible John reveals that the information in This bankruptcy filing is based on his Knowledge of what was going on at FTX Obviously the information is likely to Be incomplete hence why John notes that FTX will submit additional information In the coming weeks as it’s Unearthed in Other words this still might just be the Tip of the iceberg

Now the first part of the bankruptcy Filing details how FTX was structured John identifies four groups of Businesses which he refers to as silos The first is called The wrs Silo and it Includes all of ftx’s U.S companies and Subsidiaries now for the sake of Simplicity I’ll refer to The wrs Silo as The FTX us silo The second Silo is the Alameda Silo Which includes all the companies related To Alameda research which was one of the Biggest Traders and market makers in Crypto Alameda was actually the largest Recipient of all the usdt Ever issued by Tether more about that in the Description I digress A footnote for the Alameda silos balance Sheet notes that Alameda research loaned One billion dollars to Sam bankman freed Over 540 million dollars to engineering Director nishad Singh and over 50 Million dollars to FTX co-ceo Ryan Salame The third Silo is the Venture Silo which Includes all the companies related to Ftx’s investment activities Now John refers to the fourth Silo as The.com Silo this is a little confusing Since the.com Silo includes all of ftx’s Overseas companies and subsidiaries so Let’s just call this the FTX Global silo Now John explains that these four silos Make up the FTX group not surprisingly

Sam bankman freed was the controller of All four silos John notes FTX and Alameda research co-founder Gary Wang as A minority shareholder in the FTX group Along with nishad Singh who was Apparently also a co-founder what’s Crazy is that no other investors besides Sam Gary and nishad held more than two Percent of any of the silos what’s even Crazier is that FTX had raised two Billion dollars before going bust this Means that those investors got basically Nothing in return which raises lots of Questions in my book Anyways what you’re looking at here is a Breakdown of the four silos along with The ownership Stakes that Sam Gary Nishad and other investors had in them If you’re just listening in Sam held 53 Of the FTX U.S Silo 90 of the Alameda Silo 67 of the Venture Silo and 75 of The FTX Global silo third-party Investors only held 22 of the FTX us Silo and 25 of the FTX Global Silo the Rest was owned by the trio John also provides a corporate structure Chart for the silos and their Subsidiaries now there’s honestly too Much information to go over here and It’s also kind of pointless to summarize Since John cautions that it’s Preliminary I.E incomplete The link to the full bankruptcy filing Will be in the description if you want

To take a closer look the company Organization chart is on the very last Page Anyways John goes on to give a detailed Breakdown of each of the four silos Starting with the FTX us one He begins by explaining that the FTX U.S Exchange itself had over 1 million users And was registered with the Department Of the treasury as a Money Services Business Not only that but one of the Subsidiaries of FTX us was registered With the SEC Some of you may have heard that there Are peculiar connections between FTX Alameda research and the SEC via Sam and Alameda CEO Caroline Ellison I reckon this SEC registration is Another peculiarity to add to that pile After talking about all the other Subsidiaries that were owned and Operated by the FTX U.S Silo John Reveals that these subsidiaries hold Around 1.4 billion dollars in assets However he cautions that the numbers are Likely incorrect due to Sam’s Involvement in the balance sheet report It was also unaudited Interestingly the FTX U.S Silo appears To have just under four hundred thousand Dollars of liabilities that is debt John Notes that this can’t possibly be Accurate given that ftxus presumably

Held billions of dollars in user assets Which would count as liabilities but are Not noted in the balance sheet report Next John gives a detailed breakdown of The Alameda Silo as with the FTX us Silo John cast doubt on the idea that Alameda Research had 13.5 billion dollars in Assets and just 5 billion dollars of Liabilities this is again because the Balance sheet report was provided by Sam And unaudited like the others For the Venture Silo the balance sheet Has been divided into two for the two Major subsidiaries of The Silo together These two subsidiaries had two billion Dollars in assets and an almost equal Amount in liabilities though John says It is once again unknown whether their Balance sheets are correct And last but not least we have the FTX Global Silo and John admits that his Team couldn’t figure out how many users The FTX exchange actually had all they Know for now is that Sam claimed FTX had Quote millions of users who had over 15 Billion dollars of crypto on the Exchange at the end of 2021. The most likely cooked books claimed That FTX had over 2.25 billion dollars Of assets versus less than five hundred Thousand dollars of liabilities as with FTX us it’s essentially guaranteed that Ftx’s liabilities were exponentially Larger due to the billions of dollars of

Customer assets that were on the Exchange The second part of the bankruptcy filing Explains the events that happened Shortly before the filing itself took Place John explains that the freeze on ftx’s Assets by Bahamas Regulators shortly Before the bankruptcy filing only Applied to one of the subsidiaries of The FTX Global Silo explains a lot As for Sam he was Consulting with Numerous lawyers including his own Father about his resignation as CEO and The commencement of ftx’s bankruptcy at Around 4 30 a.m on the 11th of November Sam conceded defeat and handed over Control of all of FTX to John who Immediately filed for chapter 11 Bankruptcy This ties into the third part of the Bankruptcy filing which explains what John has done since that point The first thing he did was establish a Governance structure for FTX and each of Its four silos something you’ll recall As being the first of the five chapter 11 bankruptcy objectives John explains that he and the newly Appointed directors of the four silos Will work together to meet all five Objectives of the chapter 11 bankruptcy He acknowledges that this will be easier Said than done as all four silos are

Interrelated and could therefore have Overlapping claims on the same assets John then Dives deeper into ftx’s Financials and many of his findings made The headlines The first finding was that FTX did not Keep track of its cash balances bank Accounts or the people who oversaw those Bank accounts they also didn’t consider The quality of banks they were using John explains that his team will do Their best to find ftx’s cash and Transfer it all to financial Institutions in the United States Naturally each Silo will have its own Account now I couldn’t help but notice That these cash transfers will only Occur if they can be done quote without Adverse consequences I wonder what that means Conspiracies aside so far John and his Team have managed to dig up over two Dozen FTX bank accounts around the world That collectively hold over 500 million Dollars in cash the relevant banks have Been instructed to freeze all these Accounts and not to process withdrawals For Sam or other signatories now if you Thought ftx’s bank account situation was Sketchy consider the company’s financial Reporting While the FTX us Silo was being properly Audited the FTX Global Silo was being Audited by a questionable auditing firm

That claimed to be the first to open Offices in decentraland To add insult to injury John couldn’t Find any audited financial statements For the Alameda silo or the Venture Silo He admits that it’s going to take some Time to accumulate accurate financial Information about the four silos Something tells me that those balance Sheets will have a lot of black holes Did I mention that ftx’s Empire didn’t Even have an accounting department Anyhow it turns out that ftx’s human Resources department wasn’t any better Than its financial department John said His team hasn’t even been able to put Together a list of FTX employees because None of the four silos had detailed Records of that information they didn’t Even have board meetings For what it’s worth John says he’s been Working closely with a core team of FTX Employees to figure out exactly what’s Going on Many of you probably heard the news that Almost everyone except Sam’s Inner Circle was in the dark and many FTX Employees also had their money on the Exchange As expected ftx’s disbursements that his Payouts were about as disorganized with Employees having to submit paycheck Requests in a company chat room as Reported some of ftx’s capital was used

To acquire properties in the Bahamas the Records of these transactions are of Course a complete mess Regarding the custody of cryptocurrency FTX didn’t keep any detailed records There either if I understand correctly Only Sam bankman freed and co-founder Gary Wang had access to the private keys For all the crypto wallets of the FTX Empire these private keys were Transferred around using unsecured Emails by now most of you will know that Sam and Gary use secret software to mask Their misuse of customer funds and that Alameda research was exempt from Auto Liquidation on FTX in plain English this Means that Alameda could enter extremely Risky trades and not lose money if the Trade went against them the game was Rigged in their favor and they still Lost John also confirms that the FTX Global Silo and Alameda Silo were both governed By Sam and Gary this is something that I Was wondering about in our video about The FTX Alameda situation it’s insane to Think that much of the info has come out Since that video it’ll be in the Description if you missed it Now the bad news is that Jon and his Team have only been able to locate Around 740 million dollars of Cryptocurrency held by FTX this balance Doesn’t include the almost 400 million

Dollars of crypto that was stolen from FTX nor the 300 million dollars of ftt That was recently printed What’s odd is that Jon seems to imply That Sam Gary and the other higher-ups At FTX haven’t been able to identify Other crypto wallets that may belong to The exchange this is odd because they Damn well should know given that they Were the only ones with access to the Private keys I suppose it doesn’t matter because Blockchain analytics companies are Already hard at work tracking down every Transaction that went in or out of FTX Ironically enough chain analysis the Largest blockchain analytics company Recently confirmed that it had exposure To FTX John reiterates the fact that most FTX Employees had no idea what Sam and Co Were up to they had no idea that the Assets of FTX and Alameda were being Traded back and forth nor that the Cryptocurrencies of FTX users were being Commingled with the company’s Cryptocurrencies Speaking of which John confirms that FTX Had billions of dollars in other Investments outside of cryptocurrency This is something that Caroline had Mentioned on Twitter during the chaos But many people were skeptical The list of Skeptics seems to include

John as his team has yet to identify These other assets This is all because of ftx’s Unbelievably bad record-keeping which Extended to internal communication Quote Sam bankman freed often communicated by Using applications that were set to Auto Delete after a short period of time and Encouraged employees to do the same the Conspiracy theorists aren’t going to Have a field day with that one Now despite all these hurdles John Assures the court that his team is Collecting as much information as Possible about ftx’s operations they’re Working with former and current Regulators and law enforcement around The world to that end John and his team Are also working to sort out all the Different subsidiaries FTX had around The world including selling them if they Have any value you can bet that Competing crypto companies are going to Be keeping an eye out for those fire Sales Now what caught my eye was the section About access to data that’s because John Notes that his team cannot access Certain data because quote the debtors Have been advised that attempts to Access this property of the estate May Create a risk of its loss to Unauthorized persons

John hints that this data is related to The largest clients of FTX as he claims His team cannot make a list of the top 50 largest creditors without it I reckon This list will eventually be produced But it certainly begs the question of What information will be omitted In closing John takes a dig at Sam Saying that he quote continues to make Erratic and misleading public statements On Twitter and that these statements Should effectively be ignored I reckon They’re hard to ignore when Sam should Already be behind bars and not Tweeting Or playing video games So this brings me to the big question And that’s what effect ftx’s bankruptcy Filing is likely to have on the crypto Market in short it’s going to be really Bad and that’s simply because FTX was Believed to be one of the most Trustworthy crypto companies in Existence I mean take a second to Consider that Sam was on a first name Basis with politicians was actively Pushing for crypto regulations and was Allegedly in bed with the SEC and others The FTX exchange received billions of Dollars of investment from Big names Including asset managers like BlackRock Heck even a Canadian pension fund Invested in it This gives the impression to politicians Regulators and even crypto holders that

No matter how clean a crypto company Appears to be chances are it’s doing Something Shady behind the scenes The supposedly high quality of other Crypto exchanges is now being called Into question and it’s not good you can Bet your bottom Bitcoin that we’re going To see lots of Investigation into not Just FTX but every other crypto exchange Out there This is almost guaranteed because FTX And Alameda were massive players in the Crypto industry this means they probably Have lots of information about every Crypto company As I mentioned earlier Alameda research Was the largest recipient of all the Usdt Ever issued by Terror this means There is a high likelihood that Alameda Has more information about tether than Any other crypto company besides tether Itself and it’s likely this information Will be revealed very soon On that note the information that FTX And Alameda have about counterparties May be why Sam isn’t in prison if it’s True that FTX and Alameda were working With the US government in some capacity Then you can bet that Sam has lots of Information on Uncle Sam too information That powerful people don’t want made Public now this is just my speculation But to my mind it’s the only explanation As to why Sam continues to be living

Life as usual despite doing tens of Billions and dollars in damage to ftx’s Users and The Wider crypto industry it’s Probably a similar situation for the Other insiders at FDX and Alameda in any Case it’s clear that we’re nowhere close To getting the full facts about what Happened behind the scenes until we do There’ll be no shortage of conspiracy Theories some of which could well turn Out to be true there will also be no Shortage of scrutiny directed at the Crypto industry and to be honest much of It will be justly deserved hold on tight [Music]