Sam Bankman-Fried (SBF), the founder and former CEO of the now-bankrupt cryptocurrency exchange FTX, has written a letter of apology to his employees, explaining the series of events that led to the collapse of his empire.
SBF Apologises to Employees
In screenshots of the letter shared by Semafor reporter Liz Hoffman, SBF wrote in his company’s Slack that he felt “deeply sorry” for what happened and regrets what he did to employees.
Recall that FTX’s collapse ruined many employees’ lives as they also lost their life savings. Most of them channelled their earnings back to FTX as SBF promoted the firm internally and externally.
“I didn’t mean for any of this to happen, and I would give anything to be able to go back and do things over again,” SBF said.
The alleged fraudster claimed he froze under pressure and failed to communicate when things broke down. He said he failed as CEO to ensure the right things happened in his company and wished he had been more careful.
Although SBF said he did not have complete data access, he proceeded to describe events he believed led to the collapse of FTX.
SBF: Most Credit in the Industry Dried up at Once
According to SBF, FTX had about $60 billion and $2 billion in collateral and liabilities, respectively, before the market crash in spring led to a 50% deduction in the value of the collateral.
The crash had “most of the credit in the industry drying up at once,” leaving the company’s collateral at $25 billion and liabilities at $8 billion. Another “concentrated, hyper-correlated crash in November” halved the collateral into $17 billion while liabilities stayed the same.
The former billionaire further explained that a bank run triggered by the same “attacks” in November reduced FTX’s collateral to $9 billion, making them just $1 billion larger than the liabilities. The position became “larger than its display on admin/users because of old fiat deposits before FTX had bank accounts.”
SBF said he failed to realise the full extent of the margin position and the risk posed by a heavy crash.
SBF “Reluctantly” Signed Bankruptcy Papers
Interestingly, the former CEO said he reluctantly signed FTX’s bankruptcy papers under a coordinated amount of pressure before his resignation.
“Maybe there is still a chance to save the company. I believe that there are billions of dollars of genuine interest from new investors that could go to making customers whole. But I can’t promise you that anything will happen, because it’s not my choice,” he concluded.