The collapse of FTX and Alameda has been quite the disaster over the course of the last week, with over 140 of SBF’s companies have now quickly declared bankruptcy after it was determined that they were insolvent.
SBF pretends they aren’t bankrupt
At first, SBF was trying to save the sinking ship by trying to convince the community that his companies weren’t bankrupt at all, and that they had far more cash than they actually needed.
After the balance sheet from Alameda was leaked to CoinDesk, the CEO of Alameda (well-known to the crypto community now as Caroline) tried to defend their position, claiming that the company had far more than what was demonstrated solely on their balance sheet.
Once it was determined that they were insolvent, and weren’t able to process withdrawals, SBF revisited Twitter to try and explain that although FTX’s main company may have had problems, the US wing of the company was completely fine.
The next day this turned out to also be fictitious, as it emerged that SBF had filed for bankruptcy for all of their companies and all of their subsidiaries.
An extremely quick decline
According to Eric Snyder, who is the Chair of the bankruptcy department at the law firm Wilk Auslander, bankruptcies normally take much longer to go through than this:
“It’s not like a normal filing where you’re lining up papers literally for weeks … within 24, 48 hours this was on the ropes and done.”
The scaleo of the implosion appears to have been completely unpredecented, with estimates of the hole in the balance sheet standing at around $9.6 billion.
A “free fall” bankruptcy
The case of FTX is a rather unusual one, in that it is what is known as a “free fall bankruptcy”.
This type of bankruptcy is one that is processed extremely quickly due to the sheer gravity of the situation.
It appears that SBF is now on the run, with many on Twitter tracking his plane having left the Bahamas and flown to Argentina.
It is not known whether he is currently being held in custody or not. His partner Caroline, who was the CEO of Alameda, is rumoured to have managed to leave Hong Kong to Dubai on another private jet, where there is no extradition treaty with the US.
In the same way as Celsius, the fact that FTX now has such a large hole in their balance sheet, with seemingly no potential recourse, and significant accusations coming of legal wrongdoing, it seems less likely with each day that those who deposited to the platform (who are legally recognised as unsecured creditors) will be able to retrieve their funds.
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