17 makes a very important appearance in all this. FTX thought their leverage was 0%, but for some reason it was exactly 1.7%.

This 1.7% is the main reason being blamed for the downfall of FTX.

Bankman takes responsibility for "poor internal labeling of bank-related accounts," which meant "that I was substantially off on my sense of users' margin." Before, he assumed 0 leverage with enough USD liquidity to deliver 24 times the average daily withdrawals. In reality, leverage stood at 1.7x and once the run on FTX accounts began, there was only enough liquidity to cover 80% of the $5 billion withdrawn on Sunday.

https://www.investors.com/news/ftx-faces-regulatory-probe-binance-unlikey-to-buy-ftx/

Link to Bankmans 1.7 tweet:

My sense before:

Leverage: 0x USD liquidity ready to deliver: 24x average daily withdrawals

Actual:

Leverage: 1.7x Liquidity: 0.8x Sunday's withdrawals

Because, of course, when it rains, it pours. We saw roughly $5b of withdrawals on Sunday--the largest by a huge margin.

https://twitter.com/SBF_FTX/status/1590709174572572675?s=20&t=OXcyqc3j-Qzqt6e3zTNAOw

Heres a good breakdown of the strangeness surrounding this massive 1.7% oopsie :

https://files.catbox.moe/t70zb5.jpg