<story><title>We will not pursue the potential acquisition of FTX</title><url>https://twitter.com/binance/status/1590449161069268992</url></story><parent_chain><item><author>JumpCrisscross</author><text>In the thick of it, illiquidity and insolvency blur. But not after the fact.&lt;p&gt;As usual, Levine put it best: “the problem is not a timing mismatch, in which FTX’s customers asked for their cash back but FTX did not have enough ready cash because it had long-term but money-good loans out. The problem is that FTX took its customers’ money and traded it for a pile of magic beans, and now the beans are worthless and there’s a huge hole in the balance sheet” [1].&lt;p&gt;Before one is insolvent, illiquidity and insolvency are circular questions of asset value. After the fact, it shouldn’t take someone more than a few minutes to come to a conclusion. (There is a deeper discussion on the folly of accepting as collateral assets correlated with confidence in oneself. I recommend reading the article.)&lt;p&gt;[1] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.bloomberg.com&amp;#x2F;opinion&amp;#x2F;articles&amp;#x2F;2022-11-09&amp;#x2F;bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.bloomberg.com&amp;#x2F;opinion&amp;#x2F;articles&amp;#x2F;2022-11-09&amp;#x2F;bankma...&lt;/a&gt;</text></item></parent_chain><comment><author>d3nj4l</author><text>Levine on SBF back in April:&lt;p&gt;&amp;gt; I think of myself as like a fairly cynical person. And that was so much more cynical than how I would&amp;#x27;ve described farming. You&amp;#x27;re just like, well, I&amp;#x27;m in the Ponzi business and it&amp;#x27;s pretty good.&lt;p&gt;I suppose he was right ;)&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.bloomberg.com&amp;#x2F;news&amp;#x2F;articles&amp;#x2F;2022-04-25&amp;#x2F;sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.bloomberg.com&amp;#x2F;news&amp;#x2F;articles&amp;#x2F;2022-04-25&amp;#x2F;sam-bankm...&lt;/a&gt;</text></comment>
<story><title>We will not pursue the potential acquisition of FTX</title><url>https://twitter.com/binance/status/1590449161069268992</url></story><parent_chain><item><author>JumpCrisscross</author><text>In the thick of it, illiquidity and insolvency blur. But not after the fact.&lt;p&gt;As usual, Levine put it best: “the problem is not a timing mismatch, in which FTX’s customers asked for their cash back but FTX did not have enough ready cash because it had long-term but money-good loans out. The problem is that FTX took its customers’ money and traded it for a pile of magic beans, and now the beans are worthless and there’s a huge hole in the balance sheet” [1].&lt;p&gt;Before one is insolvent, illiquidity and insolvency are circular questions of asset value. After the fact, it shouldn’t take someone more than a few minutes to come to a conclusion. (There is a deeper discussion on the folly of accepting as collateral assets correlated with confidence in oneself. I recommend reading the article.)&lt;p&gt;[1] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.bloomberg.com&amp;#x2F;opinion&amp;#x2F;articles&amp;#x2F;2022-11-09&amp;#x2F;bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.bloomberg.com&amp;#x2F;opinion&amp;#x2F;articles&amp;#x2F;2022-11-09&amp;#x2F;bankma...&lt;/a&gt;</text></item></parent_chain><comment><author>pseudosavant</author><text>FTX going under due to magic beans reminds me so much of Lehman Brothers going under in 2008. That time the magic beans were &amp;quot;mortgage backed securities&amp;quot; that somehow took low-quality debt, mixed it up with some magic, and out came high-quality debt, only it didn&amp;#x27;t.</text></comment>