Disgraced FTX founder Sam Bankman-Fried still sees way to rebuilding his bankrupt empire and believes he can make his clients whole

FTX’s disgraced founder Sam Bankman-Fried believes there is enough value locked up in the exchange’s balance sheet to repay client deposits held in custody and rebuild his dying crypto empire.

In a tweet thread suggesting the 30-year-old considers himself the hero that came up short, the self-proclaimed selfless said he still hoped there was a future for a post-bankruptcy FTX.

“What can I try to do? Increase liquidity, make clients healthy and restart,” he wrote to his 1 million Twitter followers on Tuesday. “All I can do is try. I’ve failed enough for the month and part of me thinks I could get somewhere. part.

For the first time since FTX and its 130 affiliated subsidiaries filed for bankruptcy on Friday, Bankman-Fried released a specific number related to the quality of its balance sheet.

He said the group still owned $9 billion worth of assets at current prices after they were “marked to market,” half what they were worth a month ago. This is coupled with cash obligations it has to meet of $8 billion.

Good news?

In theory it could be considered good news for clients, as it suggests that the warm air in the balance sheet has already largely deflated, leaving a more solid basis to work from. Even though their value has declined in recent weeks, there still appears to be a reservoir of assets worth a net $1 billion that can be liquidated.

Trouble is, according to Bankman-Fried’s account, $3.5 billion of the company’s overall assets were illiquid, meaning they couldn’t easily be converted into cash to meet claims. These can be anything from proprietary ownership to exotic bespoke derivative contracts that rarely trade and are difficult to value.

That said, it’s unclear how much of what Bankman-Fried posts on social media ultimately has much meaning. He no longer serves as CEO and his company is now in the hands of John J. Ray III, who managed the orderly dissolution of Enron on behalf of its shareholders.

Second, Bankman-Fried denied last week that Alameda Research, its cryptocurrency hedge fund famous for exploiting the so-called “Kimchi Premium” arbitrage opportunity in the price of Bitcoin, had been involved in “none of the weird stuffhe saw on Twitter.

In truth, Alameda was the source of FTX’s bankruptcy, borrowing the latter’s client funds to finance speculative crypto bets that went bad. The Wall Street Journal reported that Bankman-Fried and Alameda CEO Caroline Ellison, who were once romantically involved, covered it up internally.

‘rather disgusted’

Its empire collapsed in spectacular fashion last week after Binance withdrew its support following revelations earlier this month that Alameda, a major market maker and FTX trading partner, was hiding its insolvency.

Binance founder Changpeng Zhao said he would sell all of his holdings in FTX’s native token, FTT, which he received after exiting an investment in the rival exchange. This resulted in a surge in customer withdrawals that Bankman-Fried quantified as hitting about 5 billion dollars last Sunday alone.

FTX’s bankruptcy has been compared to both the 2008 bankruptcy of Wall Street investment bank Lehman Brothers and the Ponzi scheme fraud committed by Bernie Madoff.

Bankman-Fried even fooled a number of savvy financial investors, including Singaporean sovereign wealth fund Temasek and Sequoia Capital, who attested to his “savior complex” in late September in a sycophantic profile that he it has since been torn down. Meanwhile, Bankman-Fried’s multibillion-dollar wealth has gone up in smoke and now consists largely of his 7% plus stake in trading app Robinhood.

Despite being deliberately incorporated in Antigua and Barbuda, Bankman-Fried’s offshore cryptocurrency exchange is now seeking protection from creditors under Chapter 11 of the US Bankruptcy Code.

This process allows a company to reorganize its capital structure with the goal of cleaning up its balance sheet. This typically involves eliminating shareholders in the process, while ultimately agreeing with lenders to exchange your receivables for equity.

This could yet see a leaner and healthier FTX one day emerge from bankruptcy, although it is highly unlikely that it will ever enjoy the confidence of the market again.

On Monday, Travis Kling, chief investment officer of cryptocurrency hedge fund Ikigai Asset Management, wrote a scathing and expletive-laden condemnation of Bankman-Fried after his investors’ funds became trapped on the exchange.

“I’m quite disgusted with space as a whole and humanity in general,” he wrote.

This story was originally published on Fortune.com

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