I read Matt Levine's blog yesterday evening (recommended). It looks as if this is as bad as it could be.

Barely any liquid funds.
Billions of assets that were their own highly illiquid tokens marked at impossible-to-achieve valuations.
An $8bn balance sheet entry marked as "Hidden poorly internally labelled account".
Client funds lent to Alameda Research which owned huge amounts of FTX tokens. This means Alameda research can't sell those tokens or it may kill FTX. FTX can't ask for the money back because Alameda will need to sell the tokens.
After the crypto crash earlier in the year, FTX bought up cheap assets which had client funds. It appears it did this to lend those to Alameda to keep it running when its assets had also been killed in the crash.

If all the above is true, and there is a lot we don't know, then people are going to jail and investor reputations are going to be ruined.

As always, interested in your thoughts.

#founders #startups #venturecapital #buildinginpublic #investinginpublic