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Sam Bankman-Fried addresses $8 billion balance sheet deficit, key takeaways

The entire crypto market bled with multiple losses and asset debasements following the collapse of Sam Bankman-Fried’s crypto exchange FTX. Additionally, crypto firms exposed to FTX have received their fair share of the bitter pill.

Investigations were conducted to determine the location of the $8 billion hole in FTX’s balance sheet that caused the liquidity crisis.

The deficit on FTX’s balance sheet continued to grow. The company initially stated just $2 billion and later said it was $5 billion. The hole has now grown to over $8 billion.

In a recent Bloomberg interview, Sam Bankman-Fried (SBF), former CEO of FTX, revealed the whereabouts of the funds. SBF said it showed investors a separate balance sheet in an emergency rescue.

According to the report, SBF listed $8.9 billion in debt, $9 billion in cash and $15.4 billion in less liquid assets. The report also mentioned $3.2 billion in illiquid assets.

Sam Bankman-Fried reveals conflicting accounts

He unveiled another tally showing the actual situation at the time of the rescue meeting. The balance sheet shows similar numbers but $8 billion less cash. SBF said he mistyped the numbers.

He added that clients were sending money to Alameda Research instead of sending it directly to FTX. According to him, FTX’s internal audit system double-counted the amount and credited both companies.

According to SBF, FTX and Alameda Research had the highest cash flow, but Binance, a rival, became the top spender. He paid a net amount of $2.5 billion to buy out Binance’s investments. SBF also announced that it spent $250 million on real estate and about $1.5 billion on other expenses.

About $4 billion and $1.5 billion went into venture capital investments to acquire other companies while incorrectly counting $1 billion.

The report also states that SBF and the remaining staff spent the past weekend raising funds. The funds are intended to fill the $8 billion hole in FTX’s balance sheet and pay back customers.

Cause of FTX Collapse: Fraud or Mismanagement?

By now most people in the crypto space are saying that the FTX crisis is a scam and not an accident. On Wednesday, in his first public appearance since FTX collapsed, Bankman-Fried insisted he had not committed any fraud. He claimed he was unaware of the extent of the damage and what was happening at FTX.

In an interview with The New York Times, SBF blamed the collapse of the $32 billion FTX exchange on poor accounting and management errors. This comment sparked civil and criminal investigations. The investigation aims to determine if FTX committed a crime by lending client funds to Alameda Research.

Sam Bankman-Fried addresses $8 billion balance sheet deficit, key takeaways, Crypto Trading NewsCryptocurrency Market Posts Fresh Gains | Source: Crypto Total Market Cap on TradingView.com

However, FTX’s new CEO, John Ray III, who is in charge of the company’s bankruptcy proceedings, expressed disgust at the situation. In his words, Ray said he had never seen such a complete failure of corporate governance and condemned SBF for unacceptable management practices.

Featured image from Texas Tribune, chart from TradingView.com

Source: Crypto News Deutsch

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