Leaked documents from FTX show extraordinary growth for the cryptocurrency exchange and expenses that have soared during the company’s short existence.

FTX grew out of Alameda Research, a quantitative trading firm, in 2019. FTX CEO Sam Bankman-Fried owned majority ownership of both FTX and Alameda (read more about Alameda and its 20-year-old CEO Caroline Ellison here). FTX raised about $1.8 billion through several rounds of funding, reaching a valuation of $32 billion in January. Some of the biggest names in the venture capital world, including Tiger Global Management, SoftBank and Sequoia Capital, have backed the firm, which is based in the Bahamas. Last week, FTX, Alameda Research and about 130 affiliated companies filed for chapter 11 bankruptcy protection after a CoinDesk report leads to a bank run. Bankman-Fried also resigned as CEO of FTX last week.

With each FTX round raised, Bankman-Fried sent out a spreadsheet to prospective investors showing things like revenue, profit and loss, daily users and expenses for FTX, according to an executive who received the documents. Fortune looked at two sets of spreadsheets, one dated December 2021 and another dated June 2022. The documents mention Alameda and the fact that the market maker has overlapping ownership.

Taken together, the documents show an early picture of a rapidly growing firm run by a founder that has eschewed traditional management structures, board oversight, accounting and lawyer teams, and other standard practices of growing firms. up to this size. Spreadsheets are a far cry from audited financial data; rather, they appear to be homemade Excel files, which are sometimes confusing and have inaccurate labels. They are sales documents and do not provide a clear account of how FTX valued its various tokens or liabilities when calculating figures such as “net earnings”. Yet Bankman-Fried was able to translate those documents into nearly $2 billion from some of the savviest investors around.

The figures, which are estimates and appear to be annualized, detail staggering growth and rising costs. FTX’s revenue in 2019, the year it was founded, was $15 million, while net income was $3 million. In 2020, revenue jumped to $87 million on $31 million in net income. A year later, in 2021, revenue skyrocketed to about $1 billion, while net income was $370 million.

FTX’s success appears to have leveled off in 2022. Revenue in the fourth quarter of 2021 stood at $1.34 billion on $493 million in net income. That dropped to about $1 billion in Q1, which then dropped to $995 million in Q2 revenue. First quarter profit also fell to $371 million and then $366 million in the second quarter of this year. FTX.US general counsel Ryne Miller declined to comment.

The picture gets even murkier when it comes to FTX’s internal token, FTT. FTX created the FTT token in 2019, the same year it was spun off from Alameda. As of September 2021, the token had reached a high of $79.53. Holders of the FTT token were granted trading fee discounts and other benefits. The exchange, on its website, has stated that the FTT Token (FTT) is “the backbone of the FTX ecosystem”. The token was intended to be widely distributed, but most of it was held by FTX, a situation that helped lead to its implosion.

“The exchange lent billions, including the majority of its FTT stack, to its Alameda subsidiary initially to swap capital and eventually to cover huge losses,” said Cory Klippsten, founder and CEO of Swan Bitcoin, a services company financial. “It appears that FTX lent customer deposits to Alameda Research using FTT tokens as collateral. So as public perceptions of the value of tokens plummeted, so did the value of lending and collateral,” added Ariel Zetlin-Jones, an economist at Carnegie Mellon University’s Tepper School of Business.

FTX, to support the value of the FTT token, regularly buys back and burns tokens using 33% of the trading fees generated on its platform. According to documents reviewed by Fortune, the buy/burn rate, plus trading and other expenses, amounted to approximately $12 million in 2019; jumped to $56 million in 2020; and reached $635 million in 2021. This year, the buy/consume rate, plus trading and other expenses, was $637 million in the first quarter and $630 million in the second quarter . (The buy/burn was $4 million in 2019; $26 million in 2020; $267 million the following year; and $266 million in 2022, according to the June spreadsheet.)

Average daily volume for FTX shows a similar trend, starting at approximately $148.4 million in 2019. Volume increased 592% to $1 billion in 2020, then an average of $12.6 billion in 2021, and has remained at an average of $12.6 billion this year (an average of $8,405). % gain compared to 2019). Average daily volume of FTX (labeled execution rate, which appears to be a mistake) started to accelerate in Q1 2021, reaching about $7.4B – a 4.882% increase from 2019. It rose to $14 4 billion in the second quarter of 2021, fell to $11.8 billion in the third quarter, then rebounded in the fourth quarter of 2021, to a high of about $16.7 billion, up 11,128% from the 2019. Volume then fell to $12.5 billion in the first quarter of this year and $12.7 billion in the second quarter, which was still up 8,461%. since 2019.

For a company that posts such staggering growth numbers, there has been a lot of talk about the lack of oversight. The company was small and employed about 300 people, including US and international personnel, a spokesman said Fortune before filing for bankruptcy. FTX had a very small board, which included Bankman-Fried; FTX executive Jonathan Cheesman, who departed earlier this year; and a single anonymous external director, an attorney based in Antigua and Barbuda, according to the Financial Times. FTX also has advisory board members such as Robert Sayle, partner of Thoma Bravo, according to LinkedIn. (Several executives had apparently canceled their FTX advisor roles on LinkedIn late Monday.) Thoma Bravo and Sayle did not immediately return messages for comment.

FTX had a few well-known venture investors, but none received board seats, and FTX raised several rounds of funding that didn’t include a lead investor. Many times, investors would get very small shares, the executive said, “You don’t get a board seat for the 2%.”

—With additional reporting by Shawn Tully

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