I read the 30 page FTX Bankruptcy court filing.

How bad were FTX's internal controls?

Here are the worst examples 👇
1. Employees submitted expense reimbursements over chat

A random manager would accept or reject those reimbursements with an EMOJI
2. Related party loans:

Alameda Research (FTX's hedge fund) gave Sam Bankman-Fried a $1 billion personal loan

They also loaned Director of Engineering Nishad Singh $543 million
3. Very few records were kept.

Most decisions were made over chat, with the messages automatically deleted after a certain time.
4. FTX, a company valued at $32 billion, never had board meetings. Neither did most of the subsidiaries.
5. FTX had no cash management system.

Management had no idea how much cash was on hand at any given time, or even where all their cash was.
6. FTX didn't keep proper records of who they employed. Employees and contractors co-mingled throughout the different companies without proper documentation of how they spent their time.

Certain employees can't be located: Which could mean that some employees were fake.
7. Corporate funds were used to purchase personal use real estate. And employees & executives put their names on homes purchased with company funds.
8. Crypto deposited by customers weren't even recorded on the balance sheet. Presumably, all crypto assets just went into one central slush fund used for whatever.
9. The filing makes clear that Sam Bankman-Fried does not speak for the company, and that his erratic and misleading public statements should not be disregarded.
10. Want more?

Subscribe to GRIT 👇


• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Genevieve Roch-Decter, CFA

Genevieve Roch-Decter, CFA Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @GRDecter

Nov 18
Many are calling FTX a “Lehman Moment” for crypto.

But how similar is the collapse of FTX to Lehman?

Here’s a breakdown 🧵 Image
FTX and Lehman were founded 175 years apart.

Lehman started in 1844 as a general store that later turned into a commodity trading business.

FTX started in 2019.
Lehman Brothers was much larger than FTX.

Lehman: ~25,000 employees, $639 billion in assets, $613 billion in liabilities.

FTX: ~300 employees, $1 billion in assets, $9 billion in liabilities.
Read 18 tweets
Nov 18
2022 was the year of the crypto winter.

Then the world’s second-largest exchange collapsed. Now, the contagion is spreading. The structural weaknesses in the crypto system are threatening its very existence.

2023 might be the year of the crypto apocalypse.

Time for a 🧵
For anyone who needs a refresher, here’s what happened:

A bunch of twenty-somethings who were all sleeping with each other went to the Bahamas and set up crypto exchange FTX and trading house Alameda, which were valued at $32 billion.

Then everything fell apart.
It turns out that Alameda was overexposed to FTX’s own token, FTT.

Then the snowball effect took hold.

Binance CEO “CZ” sold his FTT, triggering a selloff. FTT prices fell, Alameda’s balance sheet tanked, investors lost trust in FTX, driving FTT ever further down.
Read 19 tweets
Nov 16
The lending arm of Genesis is halting withdrawals.

Here's what we know 👇
1. Genesis Global Capital had $2.8 billion in active loans at the end of Q3
2. Winklevoss twins' crypto exchange Gemini paused withdrawals of its Earn program, which is powered by Genesis
Read 6 tweets
Nov 15
And this:

“2) FTX has enough to cover all client holdings.

We don't invest client assets (even in treasuries).

We have been processing all withdrawals, and will continue to be…”
He deleted this tweet from October 30:

@rsalame7926 @cz_binance excited to see him repping the industry in DC going forward!

uh, he is allowed to go to DC, right?”
He deleted this tweet from October 30:

@rsalame7926 @cz_binance excited to see him repping the industry in DC going forward!

uh, he is allowed to go to DC, right?”
Read 6 tweets
Nov 15
Sam Bankman-Fried has deleted over 100 tweets in the last few days.

Here are the most notable ones he deleted:

He deleted this tweet from November 7th, the day before FTX collapsed:

4) I'd love it, @cz_binance, if we could work together for the ecosystem.”
He also deleted this tweet, which was from the same thread as the above tweet:

“3) It's heavily regulated, even when that slows us down. We have GAAP audits, with $1b excess cash. We have a long history of safeguarding client assets, and that remains true today.”
Read 4 tweets
Nov 15
Let’s do the SEC job for them…

1. Exchanges need to hold customer assets 1:1 in the asset type they were deposited.
2. Exchanges need a third party to be the custodian of the customer assets.

Must be a separate company with separate management and board than the exchange.
Read 8 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!


0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy


3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!