I expect this is a very expensively choreographed combination of PR and legal advice.
7 bill sent to Binance and random VC is plausible at least, but it sounds like the money vanished (it doesn't vanish, someone somewhere took out large sums of money).
7 bill sent to crypto is hard to believe, and sounds more like laundering, but the cash reserves should nonetheless have a paper trail.
4 bill will not vanish, or it may have never existed, or he's lying and it was moved to a Cayman acct(s) somewhere.
If it never existed, then FTX was operating more like a bank - dollars only work because they have a paper trail and we can keep printing new ones. Try cashing out your savings, you might be able to. Now try everyone cashing out - there is no money for it.
With a real bank OFC there is a lot of scrutiny and supposedly you have to keep track of assets and liabilities but there is a large degree of fudging it, plus they can always get loans from the unlimited central supply if they have an immediate shortfall...
Which might be what he's looking for i.e. a bailout via printed money, which would allow investors to withdraw funds and OFC send inflation sky high...
Of course there is money in a bank run on an otherwise solvent bank. The Fed steps in and either lends the money in exchange for its pound of flesh, or takes over and makes depositors whole, up to the FDIC limits.
The fact that the Fed CAN do this, combined with bank regulations such as reserve requirements, is why it doesn’t need to do this very often.
Banks are explicit that they borrow short and lend long. It’s not that the money isn’t there, it’s just a mismatch in liquidity/duration. For FTX, the assets themselves were bad, never mind the liquidity.
They tried to do the equivalent by minting more of their in-house coin "FTT", right? Both after the bankruptcy filing, but I saw one analysis posted on HN suggest they had been doing that on an ongoing basis as part of their operations too, trying to cover shortfalls by simply minting FTT and calling that collateral for loans or what you have.
It just... didn't work.