Today I Want to talk about the huge margin calls and massive liquidations that are coming. Accountancy firms are preparing for the worst market crash and chain of liquidations ever seen, starting with crypto exchanges and ending with major Banks Today I Want to talk about how they're preparing and why? So stay tuned and let's make some money. And now that I've straight in with the key information. So I want to start by talking about CZ the CEO of Finance being grilled on CNBC about his potentially failing firm.

Would you be able to handle it if somebody asked you for 2.1 billion dollars back? Would that be okay? Would you be able to still withstand things? We're financially okay including you have 2.1 billion dollars to give away. If somebody came to Recla to claw that back, you'd still be fine. We'll let the lawyers handling I find we are financially strong. but thus far, uh, you haven't disclosed your liabilities and I wonder why that is and whether you will? Yeah, so we are working with other firms to do the audit financials like liabilities.

Etc The artists don't reveal every problem. If you could get a big four auditor to say that if you're saying that some of them don't want to work with you, that raises questions too. They don't want to work with you because you don't have the files and the data that would make them feel comfortable signing off and and giving that stamp of approval. Actually, many of them don't even know how to audit crypto exchanges.

Um, they don't. They don't. They don't really when they are. So when they audit, they are.

They're very used to auditing or firms. Coinbase has a big forms. Coinbase has a Big four auditor. Um, I Actually, I'm I I Don't look at Coinbase, We don't really look at I Think so though.

now see this part is really, really important. So easy. Basically spent that entire interview being grilled about the solvency of his exchange. He replied saying that Binance is solvent, but he can't find a big forwarder to audit his firm because these big for Auditors don't really know how to audit crypto exchanges.

But as the guy from Squawkbox said, actually, Coinbase themselves do have a Big four auditor and have been passing audits over the last few years. It's not the Big Four Auditors don't know how to audit crypto exchanges. It's that these booster Auditors are preparing for the coming market crash and don't want their name and reputation tied to any failing firms. These bigger Auditors don't want to be another.

Arthur Anderson auditing Enron and Ernst Young certainly don't want repeat of auditing Layman Brothers Before they collapsed. When an auditor signs off on an audit report, they put their name and their reputation on the report, saying that we believe this firm is absolutely solvent and absolutely will survive for the next 12 of months at least. And obviously these big for Auditors Realize the risk with these crypto exchanges, especially the sketchy crypto exchanges like Binance. and they don't want their name and reputation tied to a failing firm that is about to go insolvent.

You may say Tom How do you know that? Well, if you didn't know I actually have a background in accounting I Worked at a big top 10 accounting firm for the last eight years before starting my YouTube channel. but I do obviously have this eight year background in accounting and I've seen a number of accounting firms turn down clients because they know they're far too risky to take on and potentially ruin their reputation for back in 2019. Sports Direct which is the UK's largest sporting retailer similar to Dick's Sporting Goods or Big Five Sporting Goods Beg the big four firms to reconsider their audit. Snub, These big four accounting firms turned around to Sports Direct back in 2019 and said we don't want to audit you anymore because you're far too risky and could potentially be insolvent and we're not wasting our reputation on you back in 2019.

Mike Ashley The guy that owns Sports Direct went and brought up a ton of different retailers that were going bankrupt or were already insolvent. Therefore, he'd basically bought a steaming pile of messy excrement And obviously these Auditors didn't want to order his financial statements because they knew there'd be such a mess. And that is exactly what is happening right now with Binance. These people accountants don't want to audit Finance because they know that it's likely to fail and they don't want to ruin their reputations.

And this is exactly how the market crash is going to start with these crypto exchanges, and we'll end up ending with the insolvency of some major banks. On top of that, you may have seen them as ours. The Auditor of Binance, Kucoin, and Crypto.com dumped them all as clients and cease doing any work for any more crypto companies. As Otto tweeted, he said that the Auditor of Binance, Cavecoin and Crypto.com dump them as clients.

As usual, the largest red flag is that of the auditor. Rage Quitting. Well, in order to rage quits and ceases to take on another client for another year, It's likely because this client is probably sketchy and likely to go bankrupt. We've also seen sketchy crypto firms like Tether saying that Auditors don't know how to audit crypto.

Binance is also saying that Auditors don't now hold toward a crypto. However, Coinbase is actually audited by Deloitte a big four firm I Imagine Deloitte Ordered her Coinbase last year because they knew that Coinbase actually had Fairly solid financials and weren't hiding any skate G expenditure and weren't hiding anything sketchy overall. But I Really do wonder if Deloitte will renew the audit of Coinbase this year knowing about the coming market crash? I Imagine that even Deloitte will burn off Coinbase as a client because Deloitte won't want to ruin their reputation if Coinbase does go insolvent and he also said that's why Coinbase's debt trades at such a large discount, because everybody knows the risk of Coinbase going insolvent. Deloitte obviously doesn't want to be the next Arthur Anderson and Ernst and Young don't want a repeat of auditing the Layman Brothers just before they collapsed back in 2007 and therefore obviously these bigger Auditors don't want to ruin their reputations.

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Yesterday this was three billion, and therefore overnight, they've racked in another three billion dollars of withdrawals. I Imagine over the next week or two, these withdrawals will continue to increase and Binance will end up going insolvent. And that's why they couldn't find a big four order tub toward it their exchange. This will obviously further cause that crypto collapse, and as crypto continues collapsing, it will further cause the stock market to collapse.

Alongside, we're already seeing that in the S P 500 and in the NASDAQ as the S P 500 is down five percent in the last two days. And obviously as The Wider Market continues collapsing, many of these hedge funds and many of these major companies and many of these major institutions and big banks will end up collapsing as well and titled together a suspended POS tweeted He said crypto exchanges failing is a distraction from the bigger problem. The bad is it banks are over leveraged to unimaginable highs. He said they need crypto exchanges to be the full guy so they can blame it on the exchanges if and when the banks fail.

I Imagine the government will end up looking for a bailout for these major Banks and will blame the collapse on these crypto exchanges kick-starting the overall crash as Michael Ropardy said crypto needs the full to expose the liquidity issues. He said the World Bank is starting to police crypto next binance and then Crypto.com And the final straw is the Dtcc Margin Call And what's really worrying and we'll amplify the overall crash is that many of these major Banks still have tons of crypto based derivatives and overall derivatives still sat on their books. As Lawrence tweeted, he said imagine losing money hand over fist, but still having tons of derivatives on your books as Jan Jack Twitter He said notice that the banks who financed the crypto exchanges Ponzi schemes are all in Europe which include Credit Suisse Deutsche Bank UBS Barclays and Euro bank UE. He said their cost of insurance against default is skyrocketing, which is obvious in the widening spread in CDs it's all credit default swaps.

We can see the price of credit default swaps for Barclays for Credit Suissevideoisture and for Eurobank.ue and for Hamburg Commercial Bank as well are all rocketing to new highs, and that's because many of these major Banks still have tons of derivatives on their balance sheets which are going sour. Many of these major banks are losing money hand over fist on these derivatives and on their overall equities positions. and therefore, it wouldn't surprise me if one or a number of these major Banks end up insolvent as well and spends. tweet is saying that Regulators have been allowing Short Selling market makers to destroy the entire Market.

He said if margin calls were enforced and collateral was met back in 2021, we would already be out of this disaster and I personally believe this. ties everything together and explains how we're in such a significant mess in the first place and why we haven't escaped the current recession and the current market crash. These crypto exchanges and major banks are all tied together as many of these major Banks allowed market makers and crypto exchanges off the hook for margin calls back in 2021, especially in January of 2021, a number of margin calls went out, but obviously the Dtcc and these major Banks simply waived these margin calls. They waived the margin calls because they expected these market makers and crypto exchanges to come up with the cash over the next few days and the problem would be solved.

They expected The Wider Market to rip to new highs in 2022, and they expected retail investors to sell out of their meme stock positions in only a few days. They expected GameStop and AMC to return back to a dollar or two in only a few days back in January of 2021. Therefore, they expected these market makers and these crypto exchanges to have the cash in only a few days time. Obviously, these market makers and these short sellers had to double down, triple down, and quadruple down on their short positions in order to push the meme stocks back down.

As a result, to do that, they had to sell off tons of their main blue chip stock Holdings to stamp up the cache in order to use that cache to push the meme stocks down. However, inadvertently, by selling all of their main blue chip stock positions, it ended up crashing the S P 500 instead of in 2022, the S P 500 rocketing to new Highs at 400 or 500 or 600 points. The S P 500 is so far falling around 20. These major banks in the Dtcc continued waiving these margin calls, especially as more and more hedge funds lost more and more money on their main blue chip stock positions.

and now these major banks are at the point where they're in too deep. If they start margin calling hedge funds now, they're going to lose significant amounts of money and many of these major Banks may end up going insolvent. But obviously, they can't continue waiving margin calls forever because they can't just wave off an entire Financial recession like they did back in 2008. These major banks in the Dtcc in the US government didn't simply waive the margin calls on bear Stearns and Layman Brothers They actually ended up going insolvent and that is exactly what is going to happen right now over the next few months as the market continues crashing to explain perfectly how this works.

I've drawn up the capital structure for Citadel back in 2020 or 2021. In the early days, we knew that Citadel had around 200 billion dollars. Obviously, through 2021, the market rocketed to new highs I Imagine at the end of 2021, they had around 250 billion dollars in blue chip stock positions and in slightly failing short positions. But in 2022 there to Double Down treble down and quadruple down on their short positions, selling off Blue Chip stocks and beginning to crash The Wider Market Therefore, their overall portfolio value would have Begin to Fall.

As the S P 500 continued falling and blue chip stocks continued falling alongside their portfolio value continue to fall as well. Don't forget Citadel are only using a fairly small position of their overall portfolio to synthetically. Sure AMC The AMC flow is only around 5 billion dollars. even if the float is sold five times over or even 10 times over, that's only 50 billion dollars.

That's only going to be a small portion of Citadel's overall portfolio value of 250 billion dollars, and especially when you factor in all of the other short Sellers as well. Because as a whole, these hedge funds and these market makers are still long on the overall market. And therefore, as the overall Market continued falling, so did their portfolio values as well. Now we know that Citadel trades on a leverage ratio of seven to one.

That means that Citadel borrows the majority of their money for every 200 billion dollars that Citadel holds, 170 billion dollars of that is borrowed from external Banks Citadel only has around 30 or 40 billion dollars of their own money and the remaining 170 billion is borrowed from these big Banks. Therefore, back in 2021 and early 2022, as soon as Citadel reached 170 billion dollars in their portfolio value and slightly below that's exactly when they should have been margin called these major Banks should have sold off Citadel's positions, wound down the firm, and they would have Incorporated 100 of their money that they lent to Citadel. But obviously they didn't do that. They allowed Citadel to continue losing money continue losing more money, and continue losing more money after that.

I Imagine that Citadel right now are somewhere in this region right here. Somewhere between having a hundred billion dollars left and somewhere between having negative 50 billion. That means Citadel has lost at least 70 billion dollars of the bank's money and has potentially lost the full 170 billion dollars or even an extra 200 billion dollars of the bank's money that they never actually owned. Obviously, right now, it's far too late for these major Banks the margin called Citadel because they'd have to recognize losses on their books of 170 billion dollars.

170 billion dollars is more money than Credit Suisse actually has the market cap of Credit Suisse is only 12 billion dollars. Therefore, 170 billion is many times the size of Credit Suisse. And to be frank, right now, Credit Suisse doesn't even have two singular nickels to rub together, let alone 12 billion dollars, let alone 170 billion. And this is exactly why we are going to see some of these major institutions and major Banks being liquidated and going insolvent as well.

When Citadel ends up collapsing, they bring down 170 billion dollars worth of unrecognized losses, which is actually many times the market capitalization of some of these major Banks And that is exactly what accounting firms are preparing for right now. And that's why they're refusing to audit many crypto exchanges and likely many more companies over the next few months. These accounting firms don't want their names tied to failing businesses and therefore they will refuse to perform orders. But guys, be sure to let me know what you think down in the comments below.

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