I posted a Twitter thread about this in an early story that I can look up that was super informative with a lot of detail, but the short of it is that it was all a house of cards based on FTT. If Alameda died, it would have tanked the value of FTT, which would have in turn killed FTX, because they were assigning huge value to FTT on their balance sheet (which is, in and of itself, insane because FTT worked more like a stock of FTX itself - a company doesn't put its own stock on the asset side of the balance sheet).
> which is, in and of itself, insane because FTT worked more like a stock of FTX itself - a company doesn't put its own stock on the asset side of the balance sheet
Thinking about it, it makes sense. But I never did before. So where does a company’s own stock normally end up at, balance-wise?
> But I never did before. So where does a company’s own stock normally end up at, balance-wise?
The company’s own stock is in the equity section (treasury stock – stock that the company has repurchased after it was issued is a contra equity account, since the act of purchasing reduces stockholder equity.)
On a balance sheet, assets - liabilities = shareholder equity. This calculated shareholder equity amount is known as a stock's book value, but this can of course differ from its market value: https://www.investopedia.com/ask/answers/how-are-book-value-...
I've always been confused about this point. In the stock buyback world apparently they just vaporize the stock when it's acquired, they don't hold it on the books because if they need to issue more they can always dilute and create new shares when they need it.
Though I would disagree that FTT really functioned equivalently to ownership shares.
