We will not pursue the potential acquisition of FTX
In the thick of it, illiquidity and insolvency blur. But not after the fact.<p>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].<p>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.)<p>[1] <a href="https://www.bloomberg.com/opinion/articles/2022-11-09/bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal" rel="nofollow">https://www.bloomberg.com/opinion/articles/2022-11-09/bankma...</a>