Frances 'Cassandra' Coppola Profile picture
Jan 20, 2023 17 tweets 9 min read Read on X
Dear @SBF_FTX. This is not a balance sheet. A balance sheet doesn't record "balances", it records assets on one side of the sheet and liabilities plus equity on the other. The "balance" is whether the totals on the two sides agree. #basicaccounting Excerpt from Sam Bankman-Fried's substack showing what he ca
Dear @SBF_FTX. Since FTX was channelling customer funds to Alameda, we already know FTX was not dependent on Alameda for liquidity. Where is the chart showing Alameda's dependence on FTX?
Dear @SBF_FTX. Revenue is not profits. Chart labelled "FTX International Daily Revenue" p
Dear @SBF_FTX. Valuing assets on your company's balance sheet according to "your model" is known as "mark to model" (or "mark to fantasy"). It is only acceptable if the market for the assets is too small for price discovery. "Over the course of 2021, Alameda’s Net Asset Value s
Dear @SBF_FTX. The problem with marking assets to fantasy is that you end up with wholly unrealistic valuations, and as a result you develop wholly irrational beliefs such as "an $8bn shortfall of liquid assets wasn't risky". (Also this isn't a balance sheet, as previously noted)
And this is what happens when your marks to fantasy unwind.
Switching substack posts. Dear @SBF_FTX, as noted before, this is not a balance sheet. It therefore does not, and cannot, show FTX US "overcapitalised by roughly $350m".
@SBF_FTX Dear @SBF_FTX. Contrary to the claim in your substack post, S&C's presentation does appear to include $428m in FTX US's bank accounts as an asset. It is the cash balance for the WRS silo and is included in the total cash balance of $1.7bn.
I admit I had to do some hunting to find it, as it's not immediately apparent that WRS silo includes FTX US. @SBF_FTX says he only had an hour to write that post, so maybe he didn't have time to look properly?
Alternatively, maybe @SBF_FTX misunderstood the executive summary. Total cash reported in this summary included $428m from WRS silo, which includes FTX US. The summary also reported $181m of digital assets (NOT cash) for FTX US.
The shortfalls are clearly in digital assets, not cash.

The $428m cash in WRS silo does not entirely belong to FTX US. It includes $128m of primarily restricted cash in LedgerX, which wouldn't be available to disburse to FTX US customers (tho @SBF_FTX seems to think it should).
Here's the evidence that @SBF_FTX thinks the restricted cash in LedgerX should be available to disburse to FTX US customers. In this spreadsheet, he's counted it in the $428m cash "in FTX US bank accounts".
In the substack post, @SBF_FTX says he doesn't know what the restricted cash at LedgerX is. Twenty seconds of Googling would have told him. bloomberg.com/news/articles/…
@SBF_FTX Dear @SBF_FTX, I'm afraid S&C's data does not confirm your claim that FTX US was solvent at the time of the Ch 11 filing. At that time, $250m of cash in LedgerX was set aside for a CFTC filing and could not be counted as part of FTX US's assets. So FTX US was probably insolvent.
Furthermore, customer balances are unlikely to be the only liabilities. Whether FTX US is solvent depends on whether total assets exceed total liabilities, not whether total assets exceed customer balances.
To be fair to @SBF_FTX, confusion between customer balances and total liabilities seems to be endemic in cryptoland. I do wish crypto people would learn basic accounting.
Related - the fact that total liabilities can be much more than customer balances is the reason why the Merkle tree "proof of reserves" beloved of several crypto exchanges proves absolutely nothing.

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More from @Frances_Coppola

Aug 26
Utterly bemused by the proliferation of maps that attach modern Jordan to Mandatory Palestine and label them as the territory of the original San Remo Mandate for Palestine. This is just one of many. All of them are not only wrong, but impossible. The San Remo Conference didn't discuss Transjordan and didn't set boundaries for any of the Mandates.

Transjordan at that time was nothing like modern Jordan. The boundary between Transjordan and Iraq wasn't finalised until 1932, and between Jordan and Saudi Arabia not until 1965, though the "six straight lines" were set in 1927. "Churchill's hiccup" (the sharp indentation of the eastern border of Transjordan) was in reality the result of a territory swap between Transjordan and Saudi Arabia, and wasn't finalised until 1925.Image
This one uses boundaries for Transjordan that weren't set until the late 1920s/early 1930s. And it also claims the British Mandate for Palestine dated from 1917 - which was before the end of WW1. It could hardly be more wrong. Image
This one, from the Jewish Virtual Library, is labelled "Map of Jewish National Home Determined By San Remo Conference 1920". Again, it is impossible. The San Remo Conference didn't determine any maps. The boundaries shown on this map weren't finalised for at least another decade.Image
Read 14 tweets
Aug 19
The extent of Israeli historical disinformation is astonishing. I used Google to search for a map of the Mandatory allocations at the San Remo conference. Almost every source was Israeli, and every Israeli source incorrectly showed the British Mandate for Palestine as incorporating what is now Jordan. This is the source of the pervasive lie that Transjordan was cut off from the Palestine Mandate, rather than being added to it. 1/
The origin of the San Remo Mandatory allocations lies in the structure of the Occupied Enemy Territory Administrations (OETA) established after WW1. OETA South roughly corresponds to today's Israel/Palestine. OETA North roughly corresponds to today's Lebanon. And OETA East, by far the largest, was made up of the Turkish "Vilayets" of Aleppo, Dayr az-Zor, and Syria. See this map. 2/Image
Horse-trading between Britain and France at the Quai D'Orsay in May 1919 resulted in France relinquishing its claims to Palestine (west of the Jordan) and Mosul (now part of Iraq) in return for a guarantee of control over Syria. "Syria" at this time meant the Vilayet of Syria as shown in the map above. It included Homs, Hama and Damascus, and - importantly - extended as far south as Aqaba.
Read 10 tweets
Aug 8
When I look at this map, I see betrayal. Not of the Jews, as Israel likes to claim, but of the Arab peoples of the Middle East, and in particular those living to the west of the Jordan. Image
Running across the map, cutting Syria off from Palestine and Transjordan, is the Sykes-Picot line. This represents Britain's betrayal of the promise of independence it made to the Arab peoples who, by rising up against their Ottoman overlords, helped the Allies win WW1.
And running north to south, dividing the Jordan river, is Churchill's extension of the Beirut-Aleppo line separating Lebanon from Syria. This represents Britain's denial of self-determination to the people living to the west of the Jordan while granting it to those living to the east, and the terrible lie that made this possible - a lie that the British government maintains to this day.
Read 7 tweets
Aug 5
Hansard really is a goldmine. This is from a House of Lords debate on 1st March 1923. api.parliament.uk/historic-hansa…

If you've never heard of the "now famous Beirut and Aleppo line" (I hadn't), it's the line on the map that the British drew to exclude coastal districts of southern Turkey, Syria and Lebanon from the pledge of independence they made to the Arabs in 1915. The map (from the 1937 Peel Report) shows where the line ran.Image
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The British argued that the line extended far further south than the limit of the Sanjak of Damascus, and on that basis claimed that Palestine west of the Jordan was not included in the 1915 pledge. This fudge enabled them to protect the Balfour Declaration, whose promise of a Jewish national home in that land was only achievable if the Arab residents were denied independence.
The House of Lords was unhappy with this piece of sleight-of-hand, so asked for the parts of the correspondence between Sir Henry McMahon and the Sharif of Mecca that included the 1915 pledge to be publicly disclosed. The Government refused.
Read 7 tweets
Aug 2
Astonishing paragraph in the Peel Commission's 1937 report. Balfour didn't just ignore the Palestinian Arabs, he didn't even know they were there. Image
"In February, 1922, a delegation of Arab Leaders informed the Colonial Office that 'the people of Palestine' could not accept the Balfour Declaration or the Mandate and demanded their national independence".

Written in 1937.

"Palestinians" were not invented by Yasser Arafat.
Interesting. This says Transjordan was excluded from the "Jewish National Home" in an attempt to mollify Palestinian Arabs angry that the British had reneged on its 1915 promise of Arab independence. The Peel Commission spends a lot of time discussing the McMahon Pledge. Image
Read 17 tweets
Jul 31
I suggest you read the Hansard entry for Wednesday 21 July 1937: hansard.parliament.uk/Commons/1937-0….
Read especially the speech from the Secretary of State for the Colonies, and note particularly his comment about the Balfour Declaration, the text of which was taken in its entirety into the League of Nations Mandate without alteration:

"The pledge of Great Britain and of other Allied Governments was not Palestine as a home for the Jews. It was a Jewish National Home in Palestine—and there is a distinction. The phrasing is clear and the intention is clear. That was made very clear to the Jews at the time and was published to the whole world."

Neither the Balfour Declaration nor the League of Nations Mandate promised that all of Mandatory Palestine would become the Jewish homeland. Therefore the Peel Commission's partition proposal was not unlawful, as you wrongly claim.

You should also pay attention to his comments about the nature of the Mandate and the fact that it could be changed (article 27) or terminated (article 28).

This paragraph is the Secretary of State's actual recommendation to the House:

"The Commission are of opinion that the ideals of the two peoples and the intolerable burden upon His Majesty's Government can only be resolved by giving Jews and Arabs sovereign independence and self-government, not over the whole of Palestine but each over a part of it. With that conclusion His Majesty's Government agree. Only by partition can the ideals of both be realised, only by partition can peace be restored to these two nationalities, so that they will be able in the future one to help the other without fear of domination by either. It is the fear of domination of Jew by Arab and of Arab by Jew that is the root of the trouble, and the only way that can be removed is by partition and self-government. That is provided for in Article 28 of the Mandate which, being a Mandate, always envisaged the termination and the fruition of the mandatory period. We are only temporarily trustees in Palestine, trustees on behalf of the League. It is not our territory."

In other words, the Secretary of State was recommending termination of the Mandate, as provided for in Article 28. avalon.law.yale.edu/20th_century/p…

Thus, the Peel Commission's recommended partition would not have been enacted by the British Government, but by the League of Nations on termination of the Mandate.

The House did not endorse the Peel Commission recommendations as you wrongly claim. It voted to put forward the Peel Commission proposals to the League of Nations:

"That the proposals contained in Command Paper No. 5513 relating to Palestine should be brought before the League of Nations with a view to enabling His Majesty's Government, after adequate inquiry, to present to Parliament a definite scheme taking into full account all the recommendations of the Command Paper."

The British Government's despatch to the High Commissioner for Palestine in December 1937 says that the Government accepted "in principle" the partition proposal but did not accept the tentative plan outlined in the Commission's report and in particular not the Commission's proposal for compulsory transfer of Arabs from Jewish areas. The Government was clearly getting cold feet. un.org/unispal/docume…

The historian Benny Morris says the Cabinet secretly voted against the Peel Commission plan in December 1937. The Woodhead commission was tasked with producing a detailed plan for partition, but several historians say that its real job was to wreck the scheme.

Your statement that the British Government "accepted the recommendations of the Peel Commission and the announcement was endorsed by Parliament" does considerable violence to the known facts and evidence.
Since terminating the Mandate was perfectly lawful - indeed, expected at some point - the proposal put to the House and subsequently to the League of Nations did not "tear up international law", whatever the US may have thought. It was for the League to decide what form of governance would apply after termination of the Mandate. Other Mandates ended with creation of independent sovereign states.

The Secretary of State for the Colonies noted that France, faced with tensions between Christians and Muslims similar to those between Jews and Arabs in Palestine, opted for partition into a Christian state (Lebanon) and a Muslim state (Syria). He clearly regarded this as a sensible solution. After nearly a century of bloodshed, we now know that partition along ethnic or religious lines solves nothing. But France's decision set a precedent for partition of territory following the termination of a Mandate.

I've already shown that the Palestine Mandate did not promise that all of Palestine would become a homeland for the Jews, and it certainly didn't promise them a sovereign state in the whole of the Mandatory area. Partition subsequent to termination of the Mandate therefore can't have been unlawful for Palestine.

As for the role of the Arabs in killing the proposal: it was hardly unreasonable of them to oppose a proposal which would have forcibly uprooted them from their homes and lands and transferred them to another part of the territory. Indeed, since the League of Nations required Britain to protect the rights of Palestinian Arabs, this part of the proposal was arguably unlawful. Even in the July 1937 Hansard record, several Members of Parliament were uncomfortable with it.

I think we are all tired of your fact-free rants and your Arab-hate, @melanielatest.
Interestingly, the resolution eventually passed by the House was an amendment proposed by one Winston Churchill. It's worth reading his reasons for proposing it. His speech is long (hey, it's Churchill), so I've picked some key quotes.

"I do not consider that we are altogether in a free and easy position in this House in regard to this question. Pledges have been given on both sides. The pledge which all the world regarded with considerable attention, and which was mentioned by the Secretary of State in his speech, is undoubtedly the Balfour Declaration of policy put forward by the War Cabinet in the crisis of the Great War. It is a delusion to suppose that this was a mere act of crusading enthusiasm or quixotic philanthropy. On the contrary, it was a measure taken, as the right hon. Gentleman who led us in the crisis of the War knows, in the dire need of the War with the object of promoting the general victory of the Allies, for which we expected and received valuable and important assistance. We cannot brush that aside and start afresh as though it had never been given, and deal with this matter as if we had no obligations or responsibility. Therefore, I am bound to say that upon this issue, having studied the question as far as I can and having some personal connection and responsibility for it, I should have preferred the Government to have persevered in the old policy of persuading one side to concede and the other to forbear, and to carry forward that policy, hard and heavy though it may be, with all its inconveniences."

In other words, Churchill preferred a single-state solution, hard though that is to maintain.

He continues:

"I could not vote for the Government Motion that we should approve now the principle of partition. I cannot do so because it seems to me it would be premature for the Government to ask the House to commit itself finally to this main principle. The principle cannot be judged fairly apart from the details by which it is expressed... It seems to me that this is a matter on which we must know more before we can approve."

Churchill was far from the only MP to complain that the Peel Commission's report did not contain enough detail for them to make an informed decision regarding partition.

"The Secretary of State says that these details have not been worked out; they are coming at the next stage. What is the next stage? It is one for further exploration and inquiry and discussion with the League of Nations; the next stage is discussing with the various parties through the committees which will be set up. We have not got before us at this moment any of the vital data upon which we should be able to commit ourselves finally to the principle of partition. It may happen that the League of Nations may not approve of the Government's proposals, and it may happen that they may break down in detail. It may happen that the two parties, under the pressure of these proposals, may come to a better solution than is open to them at the moment. Therefore, I feel great difficulty at this stage and at this moment in committing myself to the principle of partition, and if it were the only alternative I should have no choice but to vote against it."

The British Parliament was not in a position to commit to the principle of partition. Further discussion and exploration of the proposal was needed, involving all the interested parties including the League of Nations.

"I have been looking about and walking about during the course of the afternoon to find some way by which, without hampering the forward movement and the treatment of this policy, those who do not feel inclined to commit themselves to the principle of partition may nevertheless agree with the next necessary step. It is of the greatest importance that we should be united on this problem. It is a problem where all the world is looking to see whether Great Britain behaves in an honourable manner, in a courageous manner and in a sagacious manner. I hope those who have been associated in this policy and have played some part in it will at any rate endeavour to walk together up to the point where it is perfectly clear that division arises. "

Churchill was concerned that attempting to force through partition against the will of many MPs and without involving interested parties could damage Britain's international reputation.

"There is also the question of the value of time. I do want to see some time before the House of Commons passes a definite vote of approval of the principle of partition. There are, I believe, signs on both sides that people are thinking that perhaps rather than this they might make some mutual concessions."

Let's not be hasty. They might still agree to compromise. It really would be better not to have partition.

"Therefore, with your permission, and supposing that it fits in with the procedure, I should propose to move, as an Amendment to the Amendment of the official Opposition, to insert after the word "proposals" the following:
"contained in Command Paper No. 5513 relating to Palestine should be brought before the League of Nations with a view to enabling His Majesty's Government, after adequate inquiry, to present to Parliament a definite scheme in accordance with the policy as set out in that Paper." "

Churchill was a master of filibuster. Never was such a crucial decision so expertly delayed. He pushed the proposal up to the League of Nations, knowing they would take a few months to consider it. And if they approved partition in principle, then his Amendment required the British Government to conduct a formal inquiry, which wouldn't report for several months or even years.

Churchill really, really, didn't want partition.
Read 6 tweets

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