Jump Trading lost $206 million as a result of the collapse of FTX


Market maker Jump Trading lost $206 million as a result of the collapse of the FTX Bitcoin exchange. The Block writes about this with reference to the book Going Infinite by Michael Lewis.

The amount of damage turned out to be one of the largest among companies that were not part of the bankrupt holding.

Nearly half of the $8.7 billion in assets owed to FTX’s more than 10 million account holders was concentrated in the 50 largest accounts. However, the real names of about half of this list were hidden, Lewis noted.

According to him, a division of Jump Trading called Tai Mo Shan Limited lost over $75 million. The loss of Virtu Financial Singapore, affiliated with the market maker, amounted to more than $10 million.

In the book, Lewis cited internal documents discovered by former FTX chief operating officer Constance Wang as his source of information.

A significant part of the anonymous accounts on the exchange were associated with its employees. Wang herself lost about $25 million. She only managed to keep $80,000 in her bank account.

As a sales team supervisor, Wang was aware of high-frequency traders’ concerns about FTX giving Alameda Research unfair advantages. Although this was not true, the exchange lent traders’ deposits to the affiliated firm for free, Lewis wrote.

According to the book, Wang also obtained data on FTX’s sponsorship expenses. Among the striking figures was a five-year contract with the Major League Baseball for $162.5 million. And a seven-year contract with video game developer Riot Games for $105 million Wang associated the fact that the CEO of the exchange, Sam Bankman-Fried, liked League of Legends.

Additionally, endorsement deals have been struck with the Coachella Valley Music Festival ($25 million), NBA star Stephen Curry ($31.5 million), the Mercedes Formula 1 team ($79 million) and Shark Tank’s Kevin O’Leary ( $15.7 million).

“I tried to ask these questions. But I thought they were using Alameda’s profits or Sam’s investments made a ton of money,” Wang said.

Another document that caught her attention was Alameda’s estimated balance sheet, which stood in stark contrast to previous versions.

“When I saw it, I told my team not to reveal it to outside parties unless they wanted to lose their name and reputation,” she said.

In her opinion, a hastily prepared document on the eve of the collapse declared assets from Bankman-Fried’s private investments worth more than $4.7 billion. The liabilities section showed client deposits of more than $10 billion. These funds were supposed to be held by FTX, but in the end they ended up in the private trading fund of the founder of the exchange.

Let’s remember that Lewis in Going Infinite also revealed details of Bankman-Fried’s personal relationship with Alameda CEO Caroline Ellison.

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