Embattled ex-CEO Claims FTX is Still Solvent

By Adedapo Adesanya

The former chief executive of the collapsed crypto exchange, FTX, Mr Sam Bankman-Fried, has claimed that FTX is still solvent, even as it begins the formal bankruptcy process.

In a series of tweets posted overnight on Tuesday, Mr Bankman-Fried insisted the firm had about $9 billion of assets, in a mixture of semi-liquid and illiquid holdings, while owing customers only $8 billion.

The tweets implicitly double down on his early claim that his company’s holdings of Serum, a token FTX controls with a current market cap of $80 million, is worth $2 billion.

More than $2 billion of the assets the company holds are in a crypto token called Serum, the underlying token of a decentralised exchange launched by FTX in 2021.

“A few weeks ago, FTX was handling ~$10bn/day of volume and billions of transfers,” he wrote. “Here’s where things stand today, roughly speaking,” he said, before saying the company had $5.5bn of “semi” liquid assets and $3.5bn of “illiquid” assets. “And yeah, maybe that $9bn illiquid [at market prices] isn’t worth $9bn. [On the other hand] – a month ago it was worth $18bn.”

Despite valuing its holdings of the token at $2.2 billion and claiming they were worth more than $5 billion only a few weeks earlier, the total implied market capitalisation of all freely trading Serum is only $80 million It would be hard for FTX or its creditors to sell 25 times more serum than had ever previously been traded at anywhere near the current market price, or at all.

Despite being ousted as the chief executive, Mr Bankman-Fried continues to try to raise capital for a rescue package for the exchange. “What can I try to do? Raise liquidity, make customers whole, and restart. Maybe I’ll fail. Maybe I won’t get anything more for customers than what’s already there,” he said.

Last Friday, FTX said it would initiate bankruptcy proceedings in the United States while its Mr Bankman-Fried resigned.

The announcements, made on the company’s Twitter handle, come days after larger rival Binance walked away from a proposed acquisition and left it scrambling to raise about $9.4 billion from investors and rivals.

Mr Bankman-Fried’s trading firm Alameda Research is also part of the bankruptcy protection, the company said.