wassielawyer （哇西律师）
@wassielawyer
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Biglaw restructuring lolyer turned hentai penguin in suit.
Singapore
Joined March 2018
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Don't really blame
@hosseeb
for this to be honest.
Its pretty clear the rest of the crypto VCs are following some variation of my due diligence framework. Most don't have
@dragonfly_xyz
's resources.
I have now updated it for future reference.
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1/ Ok so just processing this out loud because I am pretty mindblown that FTX chose - of all options, a buyout from Binance.
These were the options open to SBF: (a) seek emergency debt financing, (b) seek new money investment, (c) liquidate assets and/or (d) buy time...
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1/ Chapter 11: Electric Boogaloo
As I predicted, FTX has now filed for a Chapter 11 in the US. The filing includes FTX Intl, Alameda and most interestingly - FTX US.
So here is a hentai anime penguin in a suit to walk you through what it means for FTX and users.
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Unlike Voyager, Celsius etc where their terms of service allowed them to onlend or rehypothecate your assets for yield, FTX's specifically states that title to assets remains with the customer.
Which means FTX was literally stealing customer funds. Clearest criminality so far...
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1/ A lot of speculation floating around re FTX's solvency.
Here's 2 cents from a hentai anime penguin in a suit on why FTX probably isn't collapsing (but is likely facing short-term liquidity issues) based on FTX's current behavior and this Wassie's anecdotal experiences.
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1/ Ok just some clarifications because people instantly become insolvency practitioners / lawyers whenever a platform is experiencing difficulties to maximize engagement farming.
Now
@CelsiusNetwork
is clearly insolvent. The question is what sort of insolvency are they in?
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I see this girl a lot and I'm confused about her story.
So she got rugged by Celsius and became some sort of crypto paparazzi/e-girl that hangs out with the latest villains / wannabe main characters using the fact that she is the kind of Asian that white guys find attractive?
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This is my final contribution to the Terra collapse.
Combining two of the leading proposals to create a value proposition that may be able to attract new money.
I am going on a cruise tomorrow and will not actively engage in this further.
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Extract of FTX terms of service.
If title to the Digital Assets belong to the customer and FTX used it - that is the definition of theft...
Unlike Voyager, Celsius etc where their terms of service allowed them to onlend or rehypothecate your assets for yield, FTX's specifically states that title to assets remains with the customer.
Which means FTX was literally stealing customer funds. Clearest criminality so far...
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Anyone else think it’s pretty insane that Celsius is considering Chapter 11, 3AC is in liquidation and various players are dealing with very real fallouts while
@terra_money
, the first domino to fall is just happily working on their V2.0 after voting to delete their own debts?
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1/ The fact that 3AC has been put into liquidation in the BVI is hitting headlines everywhere. But what does that mean? What is this Chapter 15 that just been been filed in the US?
Here is a thread demystifying all of this from a hentai anime penguin in a suit:
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1/ Had a chance to skim through this document. Interesting points (which I will go through in more detail):
(1) The yacht
(2) Why 3AC went under
(3) Kyle / Su being uncooperative
(4) Tai Ping Shan
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No “bank”, crypto or otherwise is “solvent” enough to meet 100% withdrawals because they all deploy their assets.
If everyone withdrew their money out of HSBC tomorrow they’d get fucked.
Kinda tired of people somehow presenting this fact as breaking news in the crypto space.
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Alameda was secretly exempted from FTX's auto-liquidation protocols.
LITERALLY GOD MODE.
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1/ Here is a thread with some visual aids on how a Binance bailout or acquisition of FTX could be structured from a hentai anime penguin that has done quite a few big ticket distressed M&As and restructurings in his day.
Hint: It really isn't as simple as people try to make it.
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2/ via seeking bankruptcy protection to facilitate (a) - (c). Sam has chosen to seek a bailout from Binance - the very party that has triggered the bank run in the first place.
What we can gather from this is that FTX was indeed lending out customer funds to other parties...
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3/ likely to Alameda. This means that, as I speculated earlier, FTX was working on a fractional reserve model where it was not prepared to meet withdrawals on the bank run which CZ triggered on FTX. In order to meet these bank runs, FTX needed to unwind its Alameda loans.
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10/ Thats enough excitement for one night. Going to go to sleep and see what spicy shit comes out of this.
Can't wait to see the details of the Alameda-FTX relationship.
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1/ Disingenuous to reference LUNA imo - FTX-Alameda are so fundamentally structurally different from Terra that an FTX failure scenario would look very different.
CZ knows this of course but he also knows that the average FTX user does not.
Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won't pretend to make love after divorce. We are not against anyone. But we won't support people who lobby against other industry players behind their backs. Onwards.
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Got an idea for a board game. It’s like monopoly except all the properties are already bought by boomers so you are constantly paying rent until you land some chance / community chest cards that allow you to make revanchist dynastic wealth via magic internet money and gambling.
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9/ So customers are going to be made whole (because CZ is plugging the gap) but FTX (under new management) will surely be looking to recover the outstanding amounts from Alameda.
Are we now then looking at a potential Alameda insolvency scenario?
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Many of those who lost everything in $UST are from countries with unstable currencies and governments seeking refuge in the promise of decentralised money.
To call them non-believers is absolutely reprehensible. They never wanted astronomical returns - only stability.
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You have 1 SOL.
Sam steals your SOL. Sam goes to jail. John takes over.
John says: “Here’s $16 for your SOL”.
You: “I don’t want $16 I want my SOL. It’s $190 now.”
John: “Sorry G’s selling the locked SOL at $60.”
You: “Can I get the locked SOL?”
John: “No.”
You: “Can I…
You know sth really cool the FTX estate could do with the locked SOL?
Give it to the people that Sam stole SOL from via a trust instead of giving them $20 per coin and selling it to other funds for ~$60 per coin at a 65% discount to market price.
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1/ Some thoughts from a Wassie in a suit regarding the state of the market founded purely on anecdotal evidence gleaned from being a founder, advisor and investor that isn't completely out of touch with reality.
The altcoin / venture market feels incredibly uncomfortable.
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Want to clarify this.
I admire
@stablekwon
for continuing to try and lead the rebuild efforts.
I don’t think he should be the face of it given the bad optics but if nobody from the builders step up to lead it,
@stablekwon
leading is absolutely better than zero leadership.
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Unpopular opinion.
If
@stablekwon
and
@LFG_org
actually mobilise reserves to support people hurt by the debacle - they absolutely deserve credit.
They deserve criticism for poor crisis management (esp Do Kwon for his hubris) but we need to give credit where it’s due.
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8/ The conclusion? FTX must have had a massive hole in its balance sheet (likely Alameda) that could not be plugged by other financiers which forced SBF to kiss the ring. But what now?
CZ is only buying FTX which means the liability likely owing from Alameda to FTX remains.
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1/ Ever wanted to learn more about the Chapter 11 process from a hentai anime penguin in a suit? Or maybe you are a Voyager account holder and you are wondering what happens next.
Here is a thread on Chapter 11, the Voyager filing and what it all means.
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Guys if we had just bailed
@stablekwon
out last year, all the ponzis would still be running,
@SBF_FTX
would be controlling both the House and Senate and we would be telling all our normie friends to “have fun staying poor” while
@zhusu
leads us into the promised super cycle.
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1/ So here is an explanation of the structural clusterfuck in understandable English.
FTX Trading Ltd (aka FTX Intl), Alameda Research and FTX Ventures were separate structures. They should not have a commingled balance sheet, and a failure of one should not affect the others.
For anyone that is interested in how the whole thing got structurally fucked, an interesting observation is that FTX Ventures, Alameda Research and FTX Intl are all structurally separate but funds moved via interco loans between FTX Intl and Alameda, and Alameda and FTX Ventures.
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1/ I want to begin this thread by stating unequivocally that
@SBF_FTX
using customer assets to provide a line of credit to Alameda was illegal and indefensible.
That said - I find some points in SBF's account in the lead-up to the Ch 11 filing somewhat believable and disturbing.
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1/ A decision relating to
@DeFianceCapital
's lawsuit against 3AC in Singapore has just been made public and contains some interesting points around the treatment of cryptoassets and trust relationships.
For context, I have been working with
@Arthur_0x
on this for the past year.
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I want to unequivocally state I believe the LUNA/UST crisis to be a humanitarian disaster.
Many of the most vulnerable lost everything on what was marketed as a low-risk savings account and they have reason to be upset.
Do Kwon is not the devil but he must bear responsibility.
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Caroline basically playing blackjack with 10bn of our money except she can see all the cards.
Somehow still lost everything because someone should have taught her how to play blackjack first.
This blog is wild.
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The takeaway from Terras collapse isn’t that under collateralised stablecoins don’t work.
It’s that you shouldn’t publicly disclose detailed info that allows a sophisticated party to model out exactly how much they need to depeg your stablecoin.
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Singapore prison is widely regarded as one of the shittiest prisons you can find in a first world country.
And the man made it sound like a 5-star mindfulness retreat everyone needs to go on in order to revitalize mind, body and soul.
Man is blessed with a superpower...
Su on the way prison induces a harmonic return to the natural state of man
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6/ Instead of seeking finance from any other party or buy more time by throttling withdrawals or seeking a moratorium, SBF bent the knee to Binance.
Does this mean that FTX was in such a deep hole that we weren't talking about an emergency swingline but full on rescue financing?
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1/ Had some time to think things through more thoroughly so here are some further thoughts on the current state of play, factors influencing whether the Binance acquisition of FTX will be completed and what happens if it doesn't.
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4/ Alameda itself did not have the liquidity to return the funds to FTX, thus leading to it liquidating whatever liquid assets it could and returning whatever it could so that FTX could try to continue to meet the withdrawals.
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Remember that FTX hack where hackers stole 400m or so?
Am I insane for thinking that given how shit internal controls were, the hackers could have been stealing bits of FTX's money over the years without being noticed and the 400m was just the final theft?
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Does anyone ever get hit by the realisation of how out of touch we are with the average person?
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Woke up in the middle of the night and thought - why don’t we just buy FTX and turn it into a community owned CEX 🤔
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Sounds like a sale of the FTX exchange as a going concern is viable.
Bullish on recovery imo.
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1/ So what is
@SBF
's latest proposal to 'save Voyager's customers' all about? Why is Voyager so pissed with his offer?
Join your friendly neighborhood hentai anime penguin in a suit as we delve into the latest move from the
@FTX
-
@AlamedaResearch
Distressed Opportunities Fund.
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My favorite part about the new FTX CEO quote everyone is referencing is that he wasn't even required to say that in the filing.
But shit was so fucked he went out of the way to say 'yo - so Ive seen some real fucked up shit in my time but this shit... this shit is next level'.
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22/ Note that these are all opinions of a hentai penguin in a suit (albeit one experienced in distress scenarios). This is not legal, financial or moral advice and should be treated as akin to fanfic.
I am a hentai anime penguin in a suit.
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1/ Some thoughts on how a community buyout of FTX could work. Completely theoretical of course and actually executing requires an immense level of cooperation and coordination between participants which I am not sure is possible.
But here is how it could work. Theoretically.
Woke up in the middle of the night and thought - why don’t we just buy FTX and turn it into a community owned CEX 🤔
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14/ As usual, this is neither financial nor legal advice. I am a hentai anime penguin in a suit.
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1/ This AI is terrifying but I think its going to make me rich. A how-to guide to ponzis from ideation all the way through to comeback arc.
Concept for a new ponzi.
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Slightly concerned by the narrative that LUNA holders are “believers” necessary for the new chain and UST are not.
LUNA holders believed in the growth of Terra w their investment account.
UST holders believed in the reliability of Terra w their savings.
Both are believers.
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A LUNA/Terra ecosystem without Do Kwon could well be a great comeback story.
Just need new sponsors to believe in the builders tbh. New money wipes out the stain of TFL/LFGs failure.
From centralised ecosystem built around one man to a decentralised one built by the community.
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5/ But this was not enough since customer confidence was not returning - there were no deposits, only withdrawals. So some sort of external third party funding was required to meet the cash outflows.
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Breaking my Terra embargo to propose a way to save LUNC.
@stablechen
auctions Do Kwon pics as NFTs for LUNC.
NFTs staked in web interface - users burn LUNC to buy virtual eggs/tomatoes/trash to pelt at NFTs. 90% burn, 10% to NFT owner.
Final result auctioned as art for UST.
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I am getting way too interested in this $LUNA $Terra
@terra_money
thing despite my bags being incredibly negligible.
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The reason why agreement is so difficult is because people keep dealing in absolutes.
Not all LUNA holders are selfish.
Not all UST holders are unreasonable creditors.
Not all VCs are here to rob you.
Not all builders are sensible.
@stablekwon
is not the devil incarnate.
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1/ Spent 2 hours trawling through Celsius filings to write this thread explaining in non-lawyer friendly terms what the winning Celsius bid entails.
TLDR: If your Celsius bag is more than $5000, you get smol distribution and become shareholder in mining / PE company.
The Celsius plan is a great example of what an FTX2.0 deal could look like.
Headlines scream "creditors get tokenised equity" but the deal isn't as good as what some fantasize for FTX2.0. But it also isn't terrible.
Restructurings require compromise.
May do deep dive.
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Coolest thing about being a lawyer in Web3 is that almost everything is broken, there is barely any precedent and everyone is pretty down to debate and exchange information.
And if you get it all wrong, you can always just tell your client to flee to Serbia, Thailand or Dubai.
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1/ We operate in an industry where the economic incentive to be a bad actor far outweighs the good.
@zachxbt
has spent time, effort and significant mental resource shining a light on the bad actors of this space, not for personal gain but to make the industry better as a whole.
1/ It’s unfortunate I have to make this thread but I am being sued by MachiBigBrother for an article I published in June 2022.
Today Machi filed the defamation lawsuit. The lawsuit is baseless and an attempt to chill free speech. I intend to fight back & defend free speech.
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1/ This thread is about OPNX and $OX.
It is not one I particularly enjoy writing because I do not like FUDing anyone's bags or discouraging innovation. In fact, when the OPNX deck first surfaced, I thought the idea was a potentially good one.
But I think this PSA is necessary.
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Me: Chapter 11 is actually ok in these circumstances since it freezes the company and ensures no more shenanigans like the Bahamas loophole and TRON facility, giving the company some breathing room and a stable platform to restructure.
*FTX gets hacked for 600m*
Sigh…
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Got cited on Bloomberg as a 'pseudonymous lawyer' instead of 'a hentai anime penguin in a suit'.
@matt_levine
please fix!
This is a frigging good article by the way from one of the best finance authors out there and I encourage everyone to read it.
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1/ One of the most common questions I receive from startup founders is 'Where do I incorporate my company'?
This is a question without an easy answer - and lawyers / service providers all shilling you their own jurisdictions doesn't help.
Hopefully this thread does.
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How to restart FTX.
1. Turn casino on
2. Pre-Ch 11 balances marked separately (USD-R, BTC-R etc)
3. Provide R/USDC pairs (allowing claim trading)
4. Fees + recovery from clawbacks, asset sales etc go into sinking fund.
5. R-coins have pro rata share of fund till made whole.
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6/ The yacht is due to be delivered in Italy in the next 2 months but Su had already gone around flexing it.
I guess the yacht is going to be up for sale - please can someone start a DAO to purchase it?
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7/ Rescue financing would have been incredibly expensive - which means SBF didn't believe that FTX would be able to meet those financing costs. SBF also didn't think that buying time via a process like Chapter 11 would have done any good.
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13/ But we are in the crypto world so who knows what will happen?
I'd encourage
@CelsiusNetwork
to publicly disclose what sort of insolvency they are facing at the moment and the next steps they are intending to take.
Let's hope its not 100x leveraged LUNAC.
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8/ So my best guess is that FTX provides some of its deployable capital to Alameda perhaps by way of a loan facility or via an asset management agreement. Alameda deploys this capital in order to generate yield for FTX on its otherwise unused assets.
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So apparently Huobi is listing these 'FTX debt' tokens.
For the love of Christ this isn't even a debt token, its a securitization.
This is such a terrible idea on so many levels. Also - not all debt claims are equal and fungible.
1/7 $FUD (FTX Users' Debt) is a bond token issued by DebtDAO on behalf of FTX creditors.
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1/ Abu Dhabi's crypto play just took me down a rabbithole.
TLDR: Tokenised equity?
I recently looked at Abu Dhabi's new DLT Foundation legislation, looks like its aimed at bringing in DAO business.
Separately been hearing about
@M2Exchange
, a new Abu Dhabi regulated exchange.
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This is probably the most frustrating thing about BLAST.
Have spent hours explaining to clients why they can’t run on-chain hedge funds with anon LPs or dangle token incentives… while a Paradigm backed MLM straight up markets securities to the public.
Including in the US.
it's very frustrating as a lawyer in the space to see relatively conservatively structured projects get targeted on strained securities law theories while projects with fairly clear securities law violations run rampant, often with major VC backing...
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In hindsight, ICOs are probably the fairest and best way to raise money in web3.
Current meta of private (but not really) placement often with mass syndication behind it creates massive info asymmetry and unhealthy supply overhangs that MMs are brought on to address/manipulate.
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1/ The FTX jurisdictional battle between the US and the Bahamas and what it means for us all explained by a hentai anime penguin in a suit in between making coffee at the
@wassieEmporium
.
Let’s start with a recap.
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You know sth really cool the FTX estate could do with the locked SOL?
Give it to the people that Sam stole SOL from via a trust instead of giving them $20 per coin and selling it to other funds for ~$60 per coin at a 65% discount to market price.
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1/ Too much excitement - can't sleep. Further thoughts in light of CZ pulling out and info that has come to light.
Chapter 11 (or maybe Bahamas provisional liquidation(?)) now the most likely scenario. Still possibility of Voyager-like deal out of insolvency process but...
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1/ Why GTX could lead to another disaster.
I previously argued that GTX has some interesting ideas which could be taken into account in a potential restart or restructuring of FTX.
Now on the news that GTX has completed their raise, I'm here to drop some FUD.
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The next stage of industry maturity is when people realise that “USD stablecoin” does not mean 1 USD.
It translates to “token representing dollar claim on the issuer that may or may not be honoured by the issuer which may or may not be solvent”.
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1/ Longer thread on the 'private placement' mode of fundraising, why it is a net negative for the space and why in an ideal world we should make ICOs great again.
The problem isn't the identity of the participants in these private placements.
Its the model itself thats broken.
In hindsight, ICOs are probably the fairest and best way to raise money in web3.
Current meta of private (but not really) placement often with mass syndication behind it creates massive info asymmetry and unhealthy supply overhangs that MMs are brought on to address/manipulate.
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1/ Today, FTX released a preliminary analysis of the asset and liability position of and FTX US.
So here is a quick analysis brought to you by a hentai anime penguin in a suit that woke up at sunrise to attend a poorly scheduled meeting.
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Ok so if SBF has stolen all the funds, went and made it all back in one trade and then offered to pay back FTX depositors in full... do we forgive him or nah.
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1/ I spent a few hours procrastinating on real work by marking up the FTX plan term sheet. I have shared it with a few relevant parties but sharing more publicly for visibility and feedback.
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20/ It would have been near impossible for
@cz_binance
to buy FTX outside of a Chapter 11, given FTX's potential regulatory liabilities and shady transactions.
It is now incredibly doable for him to buy out customer liabilities and clean FTX assets and leave the shit behind.
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Genuinely think a lot of rugpulls in crypto are because this is the 'one shot' for the team to 'make it'.
Some of these founders will never see 7 figs IRL even if they work for a decade; what do you expect when you hand them 8 figs overnight?
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7/ Note that this is not uncommon and is standard business practice.
There is no exchange (or bank) in the world with funds to immediately pay out every single customer if every customer were to withdraw at the same time.
You keep a sensible reserve, then deploy the rest.
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Terra explained in a tweet
@stablekwon
stablecoin broke. Trillion Luna printed.
People down bad. People mad. Kwon missing.
@FatManTerra
maybe sue Kwon for holders.
#LUNAtics
want burn.
Kwon back say maybe restart. CZ say plan bad. Kwon insist restart.
Everybody even more mad.
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We should have randomised 'bank run days' where everyone pulls their funds out of a certain exchange for 24 hours to see if they have their hands in the cookie jar.
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I’m drunk enough to say this.
If you believe that people who trusted in the same ecosystem as you but bought the safer instrument with their life savings because all they wanted was stability deserve less than a person speculating on a high growth instrument - you’re a cunt.
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More than half the "innovation" in the crypto space is just re-discovering the securitised and synthetic products that led to the 2008 financial crisis and finding a way to make them riskier.
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No matter what your views are - gotta respect how
@cz_binance
handled this.
SBF was Washingtons darling and managed to blow up at the expense of customers.
CZ was under far more pressure and got out with a retirement, handover to chosen successor and customers funds SAFU.
Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.
Binance is no longer a baby. It is…
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20/ The current crisis FTX and Alameda are dealing with is not FTT's price or Alameda's FTT-backed loans.
It is the loss of customer confidence in FTX and the very short-term liquidity crunch as a result of the bank run on FTX.
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7/ So if a player were to actually consider 'bailing out' FTX customers, it makes far more sense doing it out of a Chapter 11 process because you get to leave behind whatever you don't want in the burning dumpster fire which
@SBF_FTX
created.
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Here is a handy guide for anyone worried about US securities law.
Everything can be a security if the SEC wants to deem it a security.
You can only risk mitigate.
Ideally become an ambassador of a small nation for diplomatic immunity.
If not, consider camping out in Serbia.
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1/ Since
@laurashin
's interview with
@KyleLDavies
, I've been asked multiple times about my opinion on it and the ensuing drama.
Going to try for a somewhat balanced take here which will probably enrage most people.
Kyle (and Su) doesn't owe most people an apology.
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CZ played you all. Why did he pick the number 4?
Chinese people hate the number 4 (四）because it is a homophone for 'death' （死）. Seriously, look it up - many Chinese apartments don't have a 4th floor.
When he tweets '4', he really means "we are all going to die".
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Morning: Babysitting and ranting on a forum after nerding out to my wife about restructuring law.
Afternoon: Replying to people asking me for money or defending their bags.
Evening: Invited to a Discord to explain restructuring concepts to Do Kwon himself.
What a wild day.
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