Sam Bankman-Fried said he was “deeply sorry” in a letter to former FTX employees
Sam Bankman Fried, founder and former CEO of FTX Trading, apologized to employees in an internal letter this week explaining why the cryptocurrency exchange failed under his leadership. According to the letter, Bankman-Fred said he “froze in the face of pressure and leaks” and said nothing during the onset of FTX’s downfall. FTX’s public troubles began over the weekend of November 7 when Binance CEO Changpeng Zhao announced plans to divest the exchange’s holdings of FTT, which is FTX’s native crypto token.
The news came after leaked documents revealed that FTX and its sister company, Alameda Research, are unusually intertwined and how FTT tokens were lent out.
The liquidation announcement led to rumors of FTX going bankrupt, which in turn led to cryptocurrency exchanges being run by users seeking to withdraw their assets. FTX soon ran into a liquidity crunch and withdrawals stalled. Binance reached a “letter of intent” to acquire FTX to salvage the crisis, but quickly backtracked after a look at the company’s books with Zhao explaining that the exchange was after saving.
“I didn’t mean for any of this to happen, and I would give anything to be able to go back and do things again. You were my family,” Bankman-Fred wrote in the letter, which was acquired for the first time By those at CoinDesk. I lost it, and our old house is an empty Warehouse for the Watchers. When I turn around, there is no one left to talk to.”
The message was shared on the company’s internal Slack server. Since Bankman-Fried is no longer an employee of the company, he no longer has access to the chat, and the message was shared by an existing employee.
according to the letterFTX held around $60 billion (roughly Rs. 4,87,100 crores) and $2 billion (roughly Rs. 16,230 crores) in liabilities in the spring, but the market crash reduced the value by half. He said the guarantees of the company had dropped to around $25 billion (roughly Rs. 2,02,950 crores), while liabilities had quadrupled to $8 billion (roughly Rs. 64,940 crores). Another “focused and highly correlated” collapse in November sent collateral down to $17 billion (roughly Rs. 1,38,010 crores). Finally, he said, the “bank run” caused by the “same attacks” ended with guarantees of $9 billion (roughly Rs. 73,060 crores).
“As we frantically put everything together, it became apparent that the position was too big to offer to admin/users, due to old deposits from before FTX had bank accounts,” Bankman-Fried wrote. “I didn’t realize the full extent of a margin position, nor did I realize how much risk a highly correlated crash poses.”
He added that a great deal of the pressure came from “making tough calls too quickly” when the meltdown began and that he made irrational decisions as a result. It seems that he regrets filing for bankruptcy, since some entities FTX who claims he was solvent, and believes he could have saved the company even when it was in its death throes.
“A great deal of concerted pressure came, out of desperation, to file for bankruptcy all FTX – even entities that were solvent – and despite allegations from other jurisdictions,” he wrote. “We’re likely to raise significant funding; potential interest in billions of dollars in funding came about eight minutes later.” I signed the Chapter 11 documents. Between that money, the billions of dollars in collateral the company still holds, and the interest we’ve received from other parties, I think we probably could have returned significant value to customers and saved the company.”
Although the letter outlines FTX’s downfall and comments on where the money went and why the crash occurred during his tenure, it does not address some of the more contentious aspects of his leadership. These include examples such as allegations that FTX lent customer money to its sister company Alameda Researchor leaked documents that revealed the close relationship between the two companies that include FTT codes.
in conclusion, Bankman Fried He claims he hopes FTX can be saved. “There may still be a chance to save the company,” he said. “I think there are billions of dollars of real interest from new investors that could go into making clients complete. But I can’t promise anything will happen, because it’s not my choice.”