Lehman Brothers vs FTX: How $58 Billion Vanished From Audited Balance Sheets

Read the written version

Lehman vs FTX: How Audited Balance Sheets Hid $58 Billion

Lehman Brothers moved up to $50.38bn off its balance sheet every quarter using an accounting treatment called Repo 105 — and it was, under the rules of the time, permissible. FTX pledged a token it printed itself as collateral to borrow $8.9bn of real customer money — and that was theft. What they share is not the legality but the gatekeeper: both had clean audit opinions when they died. EY knew about Repo 105 and signed anyway; FTX's auditor, in the SEC's words, 'fundamentally did not understand FTX'. Different reasons, identical result.

Full article, with the sources and the numbers →