TruthArchive.ai - Tweets Saved By @SBF_FTX
@SBF_FTX - SBF
1) As promised: My current thoughts on crypto regulation. https://www.ftxpolicy.com/posts/possible-digital-asset-industry-standards
@SBF_FTX - SBF
2) At a high level: a) we need regulatory oversight and customer protection b) we need to ensure an open, free economy, where peer to peer transfers, code, validators, etc. are presumptively free c) we should establish regulation--and until then standards--to ensure (a/b)
@SBF_FTX - SBF
3) First, it means that we have blocklists and not allowlists for illicit financial activity. We need fast, reliable lists of addresses associated with illicit finance. But peer to peer transfers should generally be free as long as they're not going to sanctioned actors.
@SBF_FTX - SBF
4) This can simultaneously enforce sanctions compliance effectively while also making sure that you don't need a passport and social security number to buy a bagel from 7-11.
@SBF_FTX - SBF
5) Second, we need something to reduce the impact of security breaches and hacks in crypto. One way we could do that is with a community standard that required attackers to return the vast majority of assets and prioritize customer protection, in return for settling the dispute.
@SBF_FTX - SBF
6) Third, we should work towards public disclosures and transparency for assets. For non-securities, we have a framework we've rolled out for FTX US Derivatives: https://ftxus-legal.webflow.io/digital-assets-information-appendix/bitcoin.
@SBF_FTX - SBF
7) Fourth, we should develop a regulatory structure that allows the settlement benefits of blockchains to protect the profits made by retail investors in equities: https://t.co/gT97VoFDfe
@SBF_FTX - SBF
8) Fifth, we should develop standards to help inform and protect customers. At its core, I think this means: a) disclosures b) safer clearing models c) suitability based on knowledge, not wealth https://ftx.us/derivs/
@SBF_FTX - SBF
9) Sixth, DeFi. This is, frankly, one of the trickiest areas to get right. The most important thing is that we not jump the gun: that industry, regulators, and lawmakers work collaboratively and thoughtfully together.
@SBF_FTX - SBF
10) But we should make sure that code, peer to peer transfers, validators, etc. are free while also ensuring that retail-facing platforms and marketing build in customer protection.
@SBF_FTX - SBF
11) Finally, stablecoins. They make payments better: https://t.co/r1FnTNQyX5. We need regulatory oversight and up to date public information and audits to confirm that dollar backed stablecoins are, in fact, backed by the dollar. https://www.ftxpolicy.com/posts/context-stablecoin-regulation
@SBF_FTX - SBF
12) All of these are just suggestions, and I would love feedback on them. It would be ideal if some industry group(s) took the lead in publishing what they felt were appropriate standards. And ultimately, we need sound regulatory frameworks.
@SBF_FTX - SBF
13) I'm optimistic that we're making progress on that last point. I'm optimistic, for instance, that the Stabenow-Boozman bill would protect customers while also protecting economic freedom; and that federal regulators are making progress towards thoughtful frameworks.
@SBF_FTX - SBF
14) But my support for any particular bill, framework, etc. is absolutely contingent on those points--contingent on them actually protecting customers, and them actually protecting economic freedom. Anyway, here's the blog post link once again: https://www.ftxpolicy.com/posts/possible-digital-asset-industry-standards.
@SBF_FTX - SBF
15) And, finally: NONE OF THIS IS LEGAL, REGULATORY, OR INVESTMENT ADVICE.
@SBF_FTX - SBF
23) Roughly 25% of customer assets were withdrawn each day--$4b. As it turned out, I was wrong: leverage wasn't ~$5b, it was ~$13b. $13b leverage, total run on the bank, total collapse in asset value, all at once. Which is why you don't want that leverage. ---
@SBF_FTX - SBF
22) And that risk was correlated--with the other collateral, and with the platform. And then the crash came. In a few day period, there was a historic crash--over 50% in most correlated assets, with no bid side liquidity. And at the same time there was a run on the bank.
@SBF_FTX - SBF
21) And problems were brewing. Larger than I realized. [AGAIN THESE NUMBERS ARE APPROXIMATE, TO THE BEST OF MY KNOWLEDGE, ETC.] Leverage built up-- ~$5b of leverage, backed by ~$20b of assets which were.... Well, they had value. FTT had value, in EV! But they had risk.
@SBF_FTX - SBF
19) Once upon a time--a month ago--FTX was a valuable enterprise. FTX had ~$10-15b of daily volume, and roughly $1b of annual revenue. $40b of equity value. And we were held as paragons of running an effective company.
@SBF_FTX - SBF
17) I know you've all seen this, but here's where things stand today, roughly speaking. [LOTS OF CAVEATS, ETC.] Liquid: -$8b Semi: +$5.5b Illiquid: +$3.5b And yeah, maybe that $9b illiquid M2M isn't worth $9b (+$1b net). OTOH--a month ago it was worth $18b; +$10b net. ---
@SBF_FTX - SBF
15) A few weeks ago, FTX was handling ~$10b/day of volume and billions of transfers. But there was too much leverage--more than I realized. A run on the bank and market crash exhausted liquidity. So what can I try to do? Raise liquidity, make customers whole, and restart.
@SBF_FTX - SBF
12) To the best of my knowledge, as of post-11/7, with the potential for errors: a) Alameda had more assets than liabilities M2M (but not liquid!) b) Alameda had margin position on FTX Intl c) FTX US had enough to repay all customers Not everyone necessarily agrees with this
@SBF_FTX - SBF
@TheCryptoDog a) stimulants when you wake up, sleeping pills if you need them when you sleep. b) be mindful of where your headspace is: I often nap in the office so that my mind doesn't leave work mode in between shifts.
@SBF_FTX - SBF
19) A few other assorted comments: This was about FTX International. FTX US, the US based exchange that accepts Americans, was not financially impacted by this shitshow. It's 100% liquid. Every user could fully withdraw (modulo gas fees etc). Updates on its future coming.