The market makers who shorted BCH based on FTX spot, perpetual and futures markets are F**KED.

So basically FTX had 0 BCH.

But they did have BCH trading pairs, for spot, futures and perpetual funds.

Now what they did was:

1) FTX shorts BCH below other exchanges spot and futures prices. - WE SAW FOR MONTHS FUTURES WERE TRADING MULTIPLE % BELOW SPOT.

2) Market makers Deposit collateral onto FTX to buy FTX's fake paper BCH at a cheap price and then short BCH at a higher price on other normal exchanges. This is supposedly "FREE ARBITRAGE". All they have to do is hold until the contract expiration, and they profit the difference in price between FTX and other exchanges.

3) FTX goes bankrupt. The market makers no longer have any long BCH positions because FTX never had any BCH, and instead the market makers only have short BCH positions on other exchanges.

4) If the price of BCH rises all these market makers stand to lose Hundreds of millions and get margin called and/or go bankrupt.

5) Evidence: After FTX went bankrupt futures prices not only lost their negative premium but they actually have gone above spot ever since. That is evidence that FTX may have been behind this. To encourage traders to short BCH spot and buy FTX BCH paper futures for free 2-5%.

We know Binance and OKX trade against their own customers, these are the largest Futures exchanges. They might be the largest short positions as well because they cant be margin called on their own exchanges, so they really thought it was free arbitrage. This could explain why Binance had over 450k BCH liabilities but only 100K BCH: https://old.reddit.com/r/btc/comments/yrhvvt/binance_just_admitted_that_they_owe_611919_bch_to/

They might have bought 350k BCH on FTX and shorted the 350k BCH of their customer BCH deposits.

Now FTX is bankrupt and admitted they dont have any BCH, Binance owes their customers 350k BCH that they do not own anymore.

Just to give an easy example:

1) FTX sells BCH to $100 while other exchanges have BCH priced at $105.

2) Binance sees this and buys futures paper BCH for $100 and sells their customer deposits of BCH for $105. Now they have a paper $5 profit from this, if they can get their $100 BCH out of FTX when the futures contract expires.

3) FTX goes bankrupt. Binance loses the $100 BCH, but has the $5 profit left. Their debt is 1 BCH rather than $100 dollars though, so if they have to buy hundreds of thousands of BCH, each BCH might cost over $200-$300.

This information also explains why FTX Sam reached out to Binance and also OKX for funding. Those two are likely so deep in this fake arbitrage to FTX that their losses are easily billions, and with FTX going under, these two exchanges/market-makers are likely already insolvent.

TLDR: Because of the FTX collapse, we are dealing with hundreds of millions in losses for market makers, plus these market makers owe actual crypto in debt/shorts due to hedging/arbitrage. So the hundreds of millions of losses could easily double or triple.