Sam Bankman-Fried, founder and former chief executive officer of FTX Trading, apologized to employees in an internal letter this week explaining why the crypto exchange failed under the direction of FTX Trading. his religion. According to the letter, Bankman-Fried said he “frozen in the face of pressure and leaks” and said nothing during the initial FTX collapse. The public troubles for FTX began over the weekend of November 7 when Binance CEO Changpeng Zhao announced plans to liquidate the exchange’s holdings of FTT, which is FTX’s native cryptocurrency token.
That news comes after leaked documents revealed how FTX and its sister company Alameda Research were unusually and related to the lending of FTT tokens.
The liquidation announcement led to rumors of FTX’s insolvency, which in turn led to users seeking to withdraw their assets fleeing on crypto exchanges. Soon after, FTX fell into a liquidity crisis and withdrawals stalled. Binance issued a “letter of intent” to acquire FTX to resolve the crisis, but quickly withdrew after reviewing the company’s books with Zhao saying that the exchange apart from savings.
“I didn’t mean for this to happen, and I would give anything to be able to go back and do it all over again. You are my family,” Bankman-Fried wrote in the letter get it for the first time by the people at CoinDesk. “I lost it, and our old house was an empty screen store. When I returned, there was no one left 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 letter shared by a current employee.
According to the letter, FTX held about $60 billion (approximately Rs 4,87,100) and $2 billion (Rs 16,230) in debt in the spring, but the market crash halved the value. He said that the company’s collateral fell to about $25 billion (roughly Rs 2,02,950), while liabilities quadrupled to $8 billion (about Rs 64,940 crore). However, another “concentration, hypercorrelation” crash in November brought collateral down to $17 billion (about Rs 1.38,010). And finally, he said, the “run from the bank” triggered by “similar attacks” ended up with $9 billion in collateral (about Rs 73,060).
Bankman-Fried writes: “As we frantically put everything together, it was clear that its position was larger than it was visible to admins/users, due to the old fiat deposits before FTX has a bank account. “I didn’t realize the full scope of the margin position, nor did I realize the magnitude of the risk posed by the hypercorrelation breakdown.”
He added that a tremendous amount of pressure was coming down causing “very quick tough calls” when the fallout started and he made irrational decisions as a result. He seems to regret filing for bankruptcy, because of several entities FTX that he claimed to be insolvent and believed he could have saved the company even as it was dying.
“A massive amount of concerted pressure has come, out of desperation, to file for bankruptcy for all FTX – even potentially liquid entities – and defy the requirements of jurisdictions. other,” he wrote. “We could have raised substantial funds; potential returns on billions of dollars in funding came about eight minutes after I signed document Chapter 11. Between those funds, the billions of dollars in collateral that the company still holds, and the interest we’ve received from other parties, I think we could have given great value back. customers and save the business.”
While the letter outlines the demise of FTX and comments on where the money went and why the collapse occurred during his tenure, he failed to address some of the more controversial aspects. in his command. These include examples such as allegations that FTX lent money to its sister company Research Alamedaor leaked documents revealing a close relationship between the two companies regarding the FTT token.
In his conclusion, Bankman-fried stated that he hopes that FTX can still be saved. “Perhaps there is still a chance to save the company,” he said. “I believe there are billions of dollars in real returns from new investors that can translate into whole customers. But I can’t promise you that anything will happen, because that’s not the case. My choice.”
