Tesla’s Elon Musk and Semafor’s Ben Smith have been having a fight on Twitter , a website the former owns. (Alphaville sighs, looks out of window, considers life choices, begins typing.)
If you’re blessed enough not to know why they are fighting , it’s because Smith’s website published an article by reporter Liz Hoffman which said FTX’s Sam Bankman-Fried owns a “sizeable chunk” of Twitter after being invited to roll a $100mn stake into the take-private.
Elon Musk used Twitter, the platform he now owns, to gleefully mock the meltdown of the crypto exchange FTX. His “bullshit meter was redlining” when he met the crypto exchange’s founder, Sam Bankman-Fried, Musk has said.
But Musk was in a friendlier mood on May 5. Two weeks after clinching a deal to buy Twitter for $44 billion, he texted Bankman-Fried just after midnight and invited him to roll the $100 million stake he had owned for a few months into a privately held Twitter.
The previously unreported message, which was reviewed by Semafor, set in motion a chain of events that has bound the two men, whose companies are both in varying degrees of crisis. Bankman-Fried owns a sizable chunk of a now privately held and debt-laden Twitter, according to an FTX balance sheet prepared after the takeover closed on Oct. 28 and circulated to investors earlier this month, which listed Twitter shares as an “illiquid” asset.
Naturally, Musk is now accusing Semafor of being compromised by SBF’s investment in Semafor, and says that SBF “may have owned shares in Twitter as a public company, but he certainly does not own shares in Twitter as a private company”. It’s worth noting that Axios’s Lucinda Shen had much the same story in early October, so it seems to be Semafor’s framing of the “secret text” and how the investment has “bound the two men” that’s got Musk riled up.
But hang on a second . . . isn’t SBF’s current stake in Twitter originally our scoop?
Earlier this month, following an FT exclusive on the details of a ramshackle ‘balance sheet’, FT Alphaville revealed the full horror show document, seemingly created by SBF himself, in full. Refresh your memory here . One interesting element of it that we noted was, under the “illiquid” assets heading, roughly $43mn of TWTR.
We’re happy to admit we slightly overlooked this. Our reasoning was that in a document full of this much bonkers shit , the presence of a relatively small amount of (seemingly) rolled-over Twitter stock was not the crucial detail (compared with, eg, the $2.2bn of Serum, lol). After all, $43mn of Twitter is not, we’re afraid to say, a “sizable chunk” of either (1) Twitter or (2) an FTX asset pile that was $8bn short of its liabilities.
But the Musk/Smith face-off has flung this particular line item into the spotlight. The story (of course) isn’t really about Semafor, which seems to use the same balance sheet that we have. It’s about who, out of Musk and SBF, knows their own business better. Let’s examine the facts as best we understand them, assuming that everyone involved is being honest:
— (1) In early May this year, SBF owned “a bit over $100mn of TWTR” that he was keen to roll into the privatisation. — (2) On Wednesday November 23, SBF owned “0%” of Twitter, per Musk.
And here’s the fuzzy bit:
— (1) SBF believed he or some part of his empire held $43mn of Twitter on November 10th. — (2) Musk says SBF “did not” roll over stock, and therefore could not have held a Twitter stake beyond October 28th (when Twitter went private)
Naturally, our first instinct was to try to locate SBF’s public Twitter stake. We couldn’t find a holding under SBF, FTX, Alameda or any of the, err, large number of other companies named in the Delaware bankruptcy on Twitter’s register, per Bloomberg (either at the point it went private late last month, and in May). There were also no clear mysterious entities floating around the $100mn mark back in May. This was always going to be a challenge given US disclosure rules aren’t very stringent.
This is all a bit angels-dancing-on-the-heads-of-pins, but it does make us inclined to certain hypothetical explanations of what has happened:
Explanation a) Musk is broadly correct, but made an error: SBF did roll over a (small) stake. However, that position may now have been completely closed, meaning SBF does, now, own “0%”.
Perhaps the reduced Twitter stake listed on the now-infamous balance sheet reflects SBF reducing his position between May and November, and then flipping the smaller rolled private stake to raise cash in a hurry? Basically, it’s possible Musk is correct SBF now owns nothing of Twitter, but missed that there was a small rollover.
Explanation b) SBF was basically utterly clueless about his assets, thought he’d rolled over a chunk of Twitter stock but actually forgot to do it because he was busy playing League of Legends , and this part of balance sheet was flat-out wrong.
We’ll admit that further explanations are possible. But given Musk is trying to make this whole thing about journalistic ethics, it is probably within his power to completely clear things up here if he wanted to. That’d be cool.
(In the meantime, if you do happen to know how much of Semafor is owned by SBF, do get in touch! Sorry, we’re just curious.)