[miohtama]

FTX/Alameda holds tons of illiquid FTT tokens that they cannot sell and which Binance was dumping. Thus, they might have not technically lied. But they were still wrong from the accounting perspective - they surely understood that FTT token cannot be used to cover gaps in large scale.

It was the question that matters "how fast you can process user withdrawals and with what risk"

Sam owns 8% of Robin Hood that is worth around ~$1B - he could sell that and cover some of the gap. But what we do not know yet is the size of the gap in time and space. FTX had $6B withdrawals pending on Tuesday.

[lancesells]

> Sam owns 8% of Robin Hood that is worth around ~$1B - he could sell that and cover some of the gap.

Not knowing too much about this space have you ever seen anything like this happen? A CEO using their personal wealth to cover their customers funds seems unlikely.

[eftychis]

That can't happen directly (I think). Mingling breaks the limited liability mantle.

He will have to buy equity or other product from FTX to infuse with cash. And if it is going bankrupt he has to stop running it to preserve the liability "shield" -- details of course depend on the country/state of organization/incorporation. I know nothing about the Bahamas.

Example: Elon for instance infused his own cash into Tesla, when it was going bankrupt. But he practically bought equity to my understanding.

Covering customer accounts is different, in a financial firm. I do not know what tools the Bahamas give to FTX. This is all uncharted territory. (Also there is legal exposure to other countries.)

[FormerBandmate]

This isn’t a thing, limited liability (which is the fundamental principle that distinguishes corporations from partnerships) prevents this. The only way would be if SBF was charged with defrauding FTX

[dmitrygr]

> have you ever seen anything like this happen? A CEO using their personal wealth to cover their customers funds

No, but I would love to see it happen, enforced by a court, and backed by a promise of jail time if the CEO fails to comply in a timely fashion.

[fantasyman1]

> A CEO using their personal wealth to cover their customers funds seems unlikely.

It’s in the category of “desperately wants to be true” of crypto crash denial.

I’ve been lampooning people defending FTX in Hacker News all day. This is what I come here for!

[tanseydavid]

Free Jon Corzine!