Founder of Failed Cryptocurrency Exchange FTX Apologizes to Ex-Employees | Digital currencies

The founder of failed cryptocurrency exchange FTX has written to its former employees apologizing for his role in its collapse and continues to insist that its collapse can only be explained by a misplaced $8 billion (£6.7 billion).

In the letter, published by industry news site CoinDesk, Sam Bankman-Fried wrote: “I am deeply sorry for my oversight failure. In the past, I wish we had done many things differently… I will do whatever I can to make it up to you guys — and to customers — even if it takes The rest of my life “.

Despite the legal liability, Bankman-Fried said the company is salvageable, and that if he had not been pressured into filing for bankruptcy in mid-November, he could have saved it.

“We probably could have raised a lot of funding,” he wrote. “Potential interest in the billions of dollars in funding came about eight minutes after 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 save the company.

“A great deal of concerted pressure came, out of desperation, to file for bankruptcy all FTX — even solvent entities — and despite the claims of other jurisdictions… I reluctantly gave in to that pressure, though I should have known Better; I wish I had listened to those who saw and continue to see value in the platform, which was and still is my belief too.”

Bankman-Fried repeated in the speech She claims that FTX was a fundamentally healthy companyproviding an account of its fall which showed it with $60 billion in assets, versus just $2 billion in liabilities, as recently as this spring.

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Since then, he says, two incidents in the cryptocurrency markets have plunged the value of its assets, even as more customers have fled to the platform. In November, his assets fell to $17 billion, before a “bank run” led to $8 billion in withdrawals in just a few days.

He said the coup was discovering another $8 billion in liabilities due to old cash deposits from “before FTX had bank accounts.” Bankman-Fried had previously explained in letters to Vox journalist Kelsey Piper that those debts had been forgotten for years.

It existed because the company used to require users to transfer money to the bank account of the Alameda Research group’s hedge fund, where deep-seated mismanagement had funneled billions of dollars of cash.

Bankman-Fried did not directly address Alameda’s involvement in his memo to employees, glossing over the source of the confusion, nor did he mention the inciting incident in the bank’s November run: the discovery that Alameda’s solvency was based on billions of dollars. of the token, FTT, printed by FTX itself, which had no deeper value beyond what FTX promised to effectively pay dividends to its holders.

“I never meant for this to happen,” 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.”

However, the story of innocence presented by the former CEO–who was replaced in mid-November by John J. Ray III, the bankruptcy specialist who oversaw Enron’s winding-up 20 years ago–and He said that FTX is the worst case he has ever seen It was criticized by observers.

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Bankman-Fried offers the company’s finances to “set everything to market, regardless of liquidity” — assuming that huge deposits of crypto assets held by FTX can be sold at near-market prices.

For large markets like bitcoin or ethereum, this assumption may be true. However, FTX has staked its multi-billion dollar assets in tokens, such as FTT and the serum it controls. According to a balance sheet drawn up by Bankman-Fried shortly before FTX’s bankruptcy, $2.5 billion of the company’s assets were in tokens manufactured by FTX, which had a total market cap of a fraction of that amount.

Delaware bankruptcy court on Tuesday heard how the former CEO He ran FTX as his “personal fiefdom”. The company’s lawyers told the court that 8% of FTX Group’s clients were based in the UK, representing about 80,000 unsecured creditors.

Most of these clients are believed to be corporate clients and investment professionals, who use the lightly regulated international FTX exchange to make risky bets on cryptocurrency values.

After the collapse of FTX, Starling Bank went online He announced a seven-month suspension of all customer deposits on cryptocurrency exchanges, citing risks to consumers. The bank said the suspension would be reviewed in June 2023.

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