EA - Money Stuff: FTX’s Balance Sheet Was Bad by Elliot Temple

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: Money Stuff: FTX’s Balance Sheet Was Bad, published by Elliot Temple on November 14, 2022 on The Effective Altruism Forum.Matt Levine explains that FTX's balance sheet (which has been leaked) is a nightmare. Sample quote:And then the basic question is, how bad is the mismatch [between liabilities and assets on the balance sheet]. Like, $16 billion of dollar liabilities and $16 billion of liquid dollar-denominated assets? Sure, great. $16 billion of dollar liabilities and $16 billion worth of Bitcoin assets? Not ideal, incredibly risky, but in some broad sense understandable. $16 billion of dollar liabilities and assets consisting entirely of some magic beans that you bought in the market for $16 billion? Very bad. $16 billion of dollar liabilities and assets consisting mostly of some magic beans that you invented yourself and acquired for zero dollars? WHAT? Never mind the valuation of the beans; where did the money go? What happened to the $16 billion? Spending $5 billion of customer money on Serum would have been horrible, but FTX didn’t do that, and couldn’t have, because there wasn’t $5 billion of Serum available to buy.FTX shot its customer money into some still-unexplained reaches of the astral plane and was like “well we do have $5 billion of this Serum token we made up, that’s something?” No it isn’t!Mirror to avoid paywall: (Loading the article in a private browsing window would probably work too.)Thanks for listening. To help us out with The Nonlinear Library or to learn more, please visit nonlinear.org.