MSTR next FTX bubble MicroStrategy owns 152,800 BTC bought for $4.53 billion.The company has $2.2 billion of debt issued by MicroStrategy, the parent company, consisting of $500 million of 6.125% senior secured notes due 2028 (the “secured notes”) and two series of convertible notes, one maturing in 2025 and the other in 2027 (together, the “convertible notes”). The secured notes are guaranteed by MicroStrategy’s subsidiaries (other than MacroStrategy and its subsidiaries) and are secured by substantially all of MicroStrategy’s assets, which include its software business and, as of Sept. 30, 2022, a total of 14,890 bitcoin.
Although MacroStrategy and its subsidiaries are technically restricted subsidiaries under MicroStrategy’s secured notes, in many ways they have the freedom of an unrestricted subsidiary, including their ability to incur debt secured by their bitcoin holdings.MacroStrategy is carved out from the limitations of the debt covenant, so it can incur unlimited debt. In addition, any crypto assets held by MacroStrategy at the time the secured notes were issued are carved out of the liens covenant; as a result, MacroStrategy may incur unlimited debt secured by the bitcoin that it held on the date the secured notes were issued.
The fact is that FTX and Alameda were created by one person - Sam Bankman-Freed. And from the very beginning, Alameda served as a liquidity provider on FTX. Alameda wallets interacted with FTX even before the launch in May 2019 and apart from other addresses, it was the only clearly identifiable counterparty. In 2020, the chief engineer of the FTX crypto exchange made secret changes to the exchange software. They allowed Alameda Research, owned by Sam Bankman-Fried, to continue to borrow funds from FTX regardless of the value of the collateral.
Weller said the prospect of such a fund coming to market after about a decade of trying by a number of issuers could pose a "big risk" for MicroStrategy.
“Many investors are buying MicroStrategy shares as a widely available proxy to gain exposure to bitcoin,” he said. “But if a simple, low-fee alternative emerges, much of the current demand for the stock could dry up, leaving a costly, slow-growing operating company to manage a cumbersome, unstable balance sheet.”
The Spot Bitcoin ETF, if approved, “won’t offer the same leverage returns as MicroStrategy,” Saylor said during the company’s Aug. 1 earnings announcement.
However, he acknowledged that a subset of institutional investors would choose Bitcoin ETFs to participate in this space.
I'll draw an analogy. Think of the rest yourself. The debtor company has doubled its capital. This is Carl's air, emptiness! Bitcoin-ETF no longer needs an intermediary in the form of this company, which can repeat the fate of FTX. Half of the Bitcoins will have to be sold on the market if the Bitcoin ETF spot is approved, because 2.2 billion debts and unlimited lending to yourself may end. Even now, investors will have a reason to doubt Michael Saylor and withdraw their funds, which will deprive the company of reliability. Will he repeat the fate of Sam? Time will show.
