EA - FTX will probably be sold at a steep discount. What we know and some forecasts on what will happen next by Nathan Young

Link to original articleWelcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: FTX will probably be sold at a steep discount. What we know and some forecasts on what will happen next, published by Nathan Young on November 8, 2022 on The Effective Altruism Forum.Tl;dr:The purpose of the document is to add clarity. It was written quickly. If you think it is net harmful, comment saying so, I'm pretty happy to delete. How ever I (Nathan) largely stand by its contents.Binance, a competitor sold a large stake of FTT, FTX’s native token and implied that FTX was at risk by mentioning a recent crash (LUNA)This started a run on the bank where depositors attempted to get their money out. FTX paused withdrawals for a while and seemed to be strugglingSBF tweeted that FTX.com (not FTX US or Alameda) was beginning the process of being sold to Binance in order to safeguard depositor assetsFTX.com comprises ~39% of Sam's assets and will be sold at a steep discount, affecting the value of FTX US and AlamedaAll depositors got their deposits back, which is goodThis likely means there will be a lot fewer assets for the effective causes, which is a tragedyOur sympathy lies with SBF and the teamSince most of the knowledge we want is around, prediction markets will probably be pretty accurate. There are some around a range of outcomes such as the sale value and FTX Future Fund regranting (scroll down)We should wait and see what happensPlease flag any issues and we'll try and correct themLonger versionThere are three key entities here (prices according to Bloomberg, so probably wrong):FTX (The worldwide business) that composes about 39%FTX.US (FTX’s US arm) a crypto exchange that composes about 13% of SBF’s wealthAlameda, a hedge fund which composes 46%Alameda was SBF’s original hedge fund and made markets for FTX. The behaviour of the two was correlated, and Alameda held large positions in FTT, FTX’s token. Coindesk reported Alameda were in trouble, and some internal documents were leaked. Alameda CEO, Carlone Ellison rebutted.Binance left/was pushed out of an early funding round of FTX and were paid in FTT, FTX’s native token. It seems like there was bad blood. This week Binance said they were selling their FTT and referenced LUNA a coin that recently crashed. It is common for projects in crypto to fail, so when there is a sense they will, people withdraw their money rapidly. This started a run on FTX.Earlier today SBF announced that, FTX.com, the non-US business had been agreed in principle to be sold. SBF talks about that here. It will likely be sold at a steep discount. This is tragic and will likely lead to fewer resources for effective causes.Cz (Binance)’s Twitter thread:There are some large unanswered questions both for EA and FTX. This reduction in resources will mean many fewer are dedicated to the worlds top problems as may of us see them. To me that is an enormous tragedy. There are questions about funding which will affect some jobs and we've tried to create some clear signals below. Finally I'm sure this has been a terrible few days for Sam and his team and will likely continue to.Relevant forecastsHere is a section of relevant forecasts to try and give people a picture of what might happen.Will CZ/Binance acquire ftx.com? If it doesn’t, I don’t know what will happen.How much will the deal imply that FTX.com is worth. Since we don’t know how much of FTX got sold, we can only guess the price implied by the sale. More than $3bn would be bad but better than expected. Less than $.5 would be catastrophic.If FTX.com is bought by Binance, will the deal imply FTX.com is worth more than $.5Bn?If FTX.com is bought by Binance, will the deal imply FTX.com is worth more than $3Bn? 66%The other key question is what happens to the FTX Foundation. How much will it spend next year? 66%Will the FTX Future Fund spend more than $300mn in 2023? ...