SBF explained FTX's failure to display Alameda's positions on its dashboard as an 'accounting quirk'

Feature Image: HackerNoon’s Midjourney AI, prompt “historical accounting quirks”

What went wrong

1. Alameda Research became insolvent when the economic environment changed (see here)

   
   

2. Failures of FTX’s internal controls

   1. FTX’s Dashboard:

      1. FTX’s dashboard for user positions did not display Alameda’s full position size on the platform, because of a historical accounting quirk. I now believe that Alameda’s position was over twice as large as what was displayed. My periodic assessments of the riskiness of our positions were often based on the dashboard’s numbers.

   2. Financials:

      1. FTX had annual audited GAAP financial statements, which to my knowledge were generally correct
      2. However, those were merely for FTX’s corporate financial state, not an audit of customer risk.

   3. Risk management:

      1. While FTX International had a team dedicated to financials, and to many other areas of the business, it did not have a team dedicated to risk management, or to user position monitoring
      2. I, as CEO, did not put adequate effort into monitoring risk on FTX