In another day of contagion for FTX and Alameda Research, certain bankruptcy documents have been released. The list of ‘Creditors Who Have the 50 Largest Unsecured Claims and Are Not Insiders’ is mainly made up of law firms and unsettled payments. However, the top payable claim is for Amazon Web Services (AWS) totaling $4,664,966.
Even for large corporations, this is a large AWS bill. Some community members believe this is due to the intense machine learning environments that Alameda may have deployed. Woodrow Oates tweeted the Top 5 Creditor on the list.
Top 5 Alameda payables include an insanely large AWS bill, $80k Bloomberg bill and $55k owed to Margaritaville Bahamas which I assume is an unpaid bar tab (???) pic.twitter.com/obhMWXyC5z
— Woodrow Oates Montague (@sadvalueinvestr) November 28, 2022
Though it is likely that Alameda was running resource-heavy machine learning environments with AWS, this is more an example of Alameda not paying their bills. By comparison, Facebook spends $11m per month on AWS as at 2020.
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The evidence stacks up as the list of payables continues. Even Bahamas bar Margaritaville Beach Resort is owed $55,319. Their online menu features no prices, but a two-night stay currently costs $357.
Company costs can add up, but it’s hard to deny that Alameda Research was reckless with its spending.
One of the few actually expected outgoings is for Bloomberg Finance LP, totaling $80,256. Bloomberg sells industry-grade terminals that help financial firms analyse data in real-time, the $80,256 could equate to just four licenses. The rest of the currently visible payables totals $253,605 and is solely made up of lawyer fees from around the world.
Why You Should Care
As more updates are released regarding the financial situation of FTX and Alameda Research, the lines become blurry. Creditors and payables are important to the ongoing case, as only some of them may be reimbursed. Depending on the size of the reimbursement, this could positively affect the cryptocurrency market.
Alameda, FTX and MobileCoin:
My takeaway from this batshit Alameda story involving an exploit of FTX’s margin system is that someone walked away with +$1 billion of PnL on a MobileCoin trade. Anyone want to step up and claim this one? One of the greatest of all time? Throw your name on the Forbes list?
Sam Bankman- Fried, may argue this is just how banks (and brokerages) work: they take deposits, they lend them out based on credit judgments to earn a spread, and – as long as depositors don’t ask for deposits back en masse – all is perfectly fine. But let me tell you what banks don’t do.
Banks do not:
Lend 70% of their deposits to one borrower.
Have that borrower be the founder of the bank.
Accept made-up “tokens” as collateral – the actual worst collateral ever conceived.
Have almost all that collateral be just two (made up) assets.
Apply de minimis haircuts to collateral—Accept derivatives of the bank itself as collateral! $FTT is not random – it relates to FTX.
As Matt Levine said, Goldman Sachs should not take $GS equity as collateral – it is circular risk. And definitely not pretend-GS equity. Alameda (Sam) and FTX (also Sam) invented intrinsically worthless tokens, keeping almost all of it for themselves.
They traded a tiny percentage, controlling the trading price. This manipulated the implied value of all of Sam’s $FTT tokens, then used the resultant implied token value as collateral to extract “borrow” customer funds from FTX.
The bogus collateral was one giant identical non-diversified risk, funding related-party transactions. And FTX lied about doing it via misleading Terms of Service.
When Sam says;
He “poorly risk-managed” it means, “I, FTX’s CEO Sam, should not have allowed Alameda Sam to use pretend Sam-money as collateral to take real-$$ from Sam’s customers.
It’s like in Dumb and Dumber when Lloyd spends all the found money, but replaced it with IOUs.