Jump Trading lost more than $200 million in FTX collapse: Going Infinite

Jump Trading lost $206 million in the FTX collapse, one of the largest amounts by any entity not owned by FTX or Alameda, according to Michael Lewis’ book Going Infinite. The book references private documents unearthed by ex-FTX COO Constance Wang as the source of the information.

Nearly half of the $8.7 billion owed to over 10 million FTX account holders was concentrated in the 50 biggest accounts, though the real names of around half of the list were concealed, Michael Lewis wrote in Going Infinite.

An entity labeled as “Tai Mo Shan Limited,” which had lost over $75 million, was an affiliate of Jump Trading, he noted. Virtu Financial Singapore was reported as having losses exceeding $10 million.

A considerable number of these disguised accounts were traced back to FTX employees. Wang herself faced personal losses amounting to around $25 million. While she managed to retain $80,000 in a separate bank account, most of her wealth had evaporated following FTX’s collapse.

As someone who had oversight of the sales team, Wang was familiar with the concerns of high-frequency traders. They frequently questioned the relationship between FTX and Alameda Research, wondering if Alameda had an unfair trading advantage. While Alameda didn’t have the suspected trading edge, FTX had loaned them the high-frequency traders’ deposits for free, Lewis wrote.

High-cost endorsements and Alameda’s controversial balance sheet

Wang also got hold of an internal spreadsheet detailing FTX’s endorsement expenditures, according to the book.

Among the eye-popping figures were a five-year deal with Major League Baseball that came in at $162.5 million and a seven-year deal with the video game developer Riot Games for $105 million — apparently just because Bankman-Fried likes League of Legends, Wang said.

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In addition, there were three-year deals with the Coachella music festival, Steph Curry and Mercedes’s Formula 1 team, costing $25 million, $31.5 million and $79 million respectively and a $15.7 million deal with Shark Tank’s Kevin O’Leary for promotional services.

“I tried to question it,” Wang said. “But I thought they were using the profit from Alameda. Or that Sam’s investments were making a ton of money.”

Another document that caught Wang’s attention was a rough Alameda Research balance sheet, which starkly contrasted with previous versions. “When I saw it, I told my team not to respond to external parties because I did not want them to lose their good name and reputation,” she said. 

Near the time of the collapse, the hastily prepared, in Wang’s view, document showcased assets from Bankman-Fried’s private investments totaling over $4.7 billion. The liabilities section showed over $10 billion in customer deposits, meant to be custodied by FTX, that ended up in Sam’s private trading fund. With only $3 billion in liquid assets, the question loomed: Where had all the money gone?

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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