We did not secretly transfer $10 billion

Caroline EllisonSam, the FTX borrow is getting really large. We're at $5 billion now. If the market turns, we're going to have a problem.

Sam Bankman-FriedIt's fine. The positions are hedged. We have plenty of collateral. The borrow is just a number on a spreadsheet. What matters is the net position.

Caroline EllisonThe collateral is mostly FTT and other illiquid tokens. If those go down, the hedge doesn't work. You know this.

Sam Bankman-FriedFTT is not going down. It's the token of the largest crypto exchange in the world. It's backed by real revenue. The market just doesn't understand the value yet.

Caroline EllisonI'm just saying we should reduce the borrow. Scale back the positions. We don't need to be this levered.

Sam Bankman-FriedWe'll talk about it later. I have a meeting with the CFTC in 10 minutes.

Caroline EllisonFTX is going to be unable to satisfy customer withdrawals. We are exploring all options. I am so sorry.

Alameda employeeHow much is the hole?

Caroline EllisonI don't have an exact number. It's at least $8 billion. Maybe more. The FTX borrow has been growing for months. We kept thinking we could trade our way out of it.

Alameda employeeDoes Sam know?

Caroline EllisonYes. He's been aware of the borrow for a long time. He told me to keep it going. He said the market would turn and we'd be fine. It didn't turn.

Alameda employeeWhat do we tell the team?

Caroline EllisonNothing yet. I'm still trying to figure out if there's a way out. Maybe Binance. Maybe someone else. I don't know.

Spreadsheet entry, "FTX borrow"~$10B. This is not sustainable. We need to figure out a plan before someone notices.

Spreadsheet entry, "Alameda net asset value"Negative. We are insolvent on a mark-to-market basis. The only reason we can continue operating is because FTX customers are funding our positions.

Spreadsheet entry, "Things Sam is worried about"1. Bank run. 2. Regulators. 3. Journalists. 4. The spreadsheet itself getting leaked. 5. Caroline leaving.

Spreadsheet entry, "Alameda liabilities detail"FTX borrow: $10.2B. Genesis loan: $2.3B. Voyager loan: $650M. BlockFi loan: $400M. Total: $13.5B. Assets (mostly illiquid): $5B. Net: -$8.5B. This is not recoverable through trading.

Caroline EllisonI feel like I can't say no to him. He's so confident and I'm just trying to keep up. I know the numbers don't work but he keeps saying they will and I want to believe him.

FriendThat sounds really hard. You're the CEO of Alameda. You have the authority to make decisions.

Caroline EllisonIt's more complicated than that. Sam founded Alameda. He owns 90% of it. He's involved in every major decision. I'm the CEO on paper but he's the one who calls the shots. I've tried to push back. It doesn't work.

FriendWhat are you going to do?

Caroline EllisonI don't know. I can't quit. The whole thing would collapse if I left. I'm trapped.

Draft tweet 1We did not secretly transfer $10 billion. Alameda had a margin position on FTX. It was not a secret transfer. It was a margin position that got too large.

Draft tweet 2The distinction matters. A transfer means we took customer money and gave it to Alameda. A margin position means Alameda borrowed against its own collateral. The collateral just wasn't enough.

Draft tweet 3I'm sorry. I should have been more careful. I should have been on top of this. I got distracted. I was running too many things. I fucked up.

Draft tweet 4I'm going to do everything I can to make this right. I'm going to raise liquidity. I'm going to make customers whole. I'm not going to stop until this is fixed.

Sam Bankman-FriedOk we need to figure out the PR strategy. The narrative is going to be "SBF stole customer money." We need to get ahead of it.

FTX executiveThe narrative is going to be that because that's what happened, Sam.

Sam Bankman-FriedThat's not helpful.

FTX executiveWhat's the alternative? "We borrowed customer money to trade and lost it" is not better. At least the first one is simple. People understand theft. They don't understand margin positions.

Caroline EllisonWe need to focus on getting Binance or someone to step in. The PR doesn't matter if we can't satisfy withdrawals. We're losing $100 million an hour.

Sam Bankman-FriedI'm talking to CZ. He's interested. He said he'd look at the books.

FTX executiveBinance is not going to save us. They're going to look at the books and run. CZ has been trying to kill us for months. He's not going to save us now.

Sam Bankman-FriedHe said he's interested. That's all I know. I'm working every angle.

FTX executiveWhat's the backup plan if Binance walks?

Sam Bankman-FriedThere is no backup plan. If Binance walks, we're done. The company is insolvent. We all know that.