Sam Bankman-Fried Says He’s ‘Deeply Sorry’ in Letter to Former FTX Employees

Sam Bankman-Fried, the founder and former chief govt of FTX Buying and selling, apologized to workers in an inside letter this week explaining why the cryptocurrency trade failed underneath his command. In accordance with the letter, Bankman-Fried mentioned he “frozen in the face of pressure and leaks” and mentioned nothing at first of FTX’s collapse. Public unrest for FTX started on the weekend of November 7 when Binance CEO Changpeng Zhao introduced plans to liquidate the trade’s holdings of FTT, which is FTX’s native crypto token.

This information got here after leaked paperwork revealed that FTX and its sister firm Alameda Analysis have been unusually entangled and the way FTT token lending was concerned.

The liquidation announcement led to rumors of FTX insolvency, which in flip led to a run on the crypto trade by customers searching for to withdraw their property. Quickly, FTX encountered a liquidity crunch and withdrawals faltered. Binance reached out with a “letter of intent” to accumulate FTX to salvage disaster decision, however rapidly backtracked after glancing on the firm’s books with Zhao stating that the trade was past economics.

“I didn’t want any of this to happen, and I would give anything to be able to go back and do it again. You were my family,” Bankman-Fried wrote within the letter that was first acquired by these at CoinDesk. “I lost that, and our old house is an empty warehouse of monitors. When I turn around, there’s no one to talk to.

The letter 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 letter was shared by a current employee.

According to the letter, FTX had about $60 billion (about Rs 4.87100 crore) and $2 billion (about Rs 16,230 crore) in liabilities as of the spring, but the stock market crash cut the value in half. He said the company’s collateral had fallen to around $25 billion (around Rs 2,02,950 crore), while liabilities had quadrupled to $8 billion (around Rs 64,940 crore). Another “concentrated and hypercorrelated” crash in November dropped collateral to $17 billion (round Rs. 1,38,010 crore). And at last, he mentioned, the “race to the bank” triggered by “the same attacks” ended with a assure of 9 billion {dollars} (about 73,060 crore rupees).

“As we frantically put everything together, it became clear that the position was bigger than its posting on admins/users, due to old fiat deposits before FTX had bank accounts,” Bankman-Fried wrote. “I did not realize the full extent of the margin position, nor the magnitude of the risk posed by a hyper-correlated crash.”

He added that there was excessive stress to make ‘robust calls in a short time’ when the meltdown began and he made irrational choices consequently. He appears to remorse submitting for chapter, as a few of the FTX entities he claims are solvent, and believes he might have saved the corporate even because it was in its loss of life throes.

“Extreme coordinated pressure has come, out of desperation, to file for bankruptcy for all of FTX — even solvent entities — and despite claims from other jurisdictions,” he wrote. “We probably could have raised some significant funds; potential interest in billions of dollars in funding came about eight minutes after I signed the Chapter 11 documents. Between those funds, the billions of dollars in collateral that l “business still held and the interest we’d received from other parties, I think we probably could have returned great value to customers and saved the business.”

Although the letter describes the fall of FTX and comments on where the money went and why the collapse occurred during his tenure, it did not address some of the more controversial aspects of his command. These include examples such as allegations that FTX lent client funds to its sister company Alameda Research, or the leaked documents that revealed the close relationship between the two companies involving FTT tokens.

In his conclusion, Bankman-Fried says he hopes FTX can still be saved. “Maybe there is still a chance to save the company,” he mentioned. “I believe there are billions of dollars of real interest from new investors that could be used to make customers whole. But I can’t promise you that anything will happen, because it’s not is not my choice.”


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