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Sam Bankman-Fried, Co-Founder and CEO of FTX, Hong Kong, China, Tuesday, May 11, 2021.
Ram Ik | Bloomberg | Bloomberg | Getty Images
Former FTX CEO Sam Bankman-Fried said in a letter obtained by CNBC sent to employees of the failed cryptocurrency exchange that his “irrational decision” was “sh—y “I’m in a situation like this,” he accused.
Bankman-Fried said he was “frozen in the face of pressure and leaks” as his crypto empire rapidly lost investor confidence and customers rapidly withdrew billions of dollars from the platform.
“In the tumult of the company’s growth, I have lost sight of what matters most. I care deeply about you, you are my family and I am sorry,” the letter continued.
“It’s too late,” a current FTX employee told CNBC.
Bankman-Fried did not immediately respond to a request for comment.
A postmortem to Bankman-Fried employees outlines the former CEO’s views. FTX’s ultimate tumble, along with approximate accounting.Crypto Exchange Valuations Starting at $32 Billion Chapter 11 Application for Bankruptcy Protection in about a week.
Bankman-Fried admitted responsibility for the chain of events, but appeared convinced he was trying to save the crypto empire in the final hours before entering Chapter 11 bankruptcy protection.
Bankman-Fried wrote:
“Between those funds, the billions of dollars in collateral the company still holds, and the interest we received from other parties, I think we could have probably returned great value to our customers and saved our business. .
Read the full letter from Bankman-Fried below.
“Hi guys-
Sorry. I regret what happened to you. And I regret what happened to my customer. You gave your all for FTX and stood by the company and me.
I didn’t intend for this to happen. you were my family I lost it and our old house is an empty warehouse of monitors. I let you all down. I froze in the face of pressure and leaks and the Binance LOI and said nothing. In the tumult of the company’s growth, I lost sight of what matters most. I care deeply about you. You were my family. very sorry.
As CEO, it was ultimately my duty to make sure the right thing happened in FTX. I should have been more careful.
I would like to explain in more detail what happened. I should have written so that I could understand it earlier.
Regardless of liquidity, we currently do not currently have full data access to piece things together, make rough estimates, and get an accurate answer.
1) The market crashed this spring, dropping collateral values by about 50%.
a. ~$60B collateral, ~$2B debt -> ~$30B collateral, ~$2B debt
2) Most of the industry’s credit will dry up at once.
a. ~$25 billion of collateral, ~$8 billion of debt
3) Collateral values fell another ~50% in a very short period of time due to the intense hyper-correlation crash in November. During that time, there was little liquidity on the bid side of the market.
a. ~$17 billion in collateral, ~8 billion in debt
4) Bank runs triggered by the same attack in November.
a. ~$9 billion in collateral
5) Desperately putting everything together, it became apparent that the positions were larger than admins/users saw due to old fiat deposits before FTX had a bank account.
a. ~$9 billion in collateral, ~$8 billion in debt
I didn’t intend for this to happen. I was unaware of the full range of margin positions, nor was I aware of the magnitude of risk posed by a hyper-correlation crash. It was used for reinvestment and not for mass personal consumption.
We deeply regret that there was an oversight. Looking back, I wish we had done many things differently. To name a few:
a) Highly skeptical of large margin positions
b) Exploring stress test scenarios involving hyper-correlated crashes and bank concurrency
c) Pay more attention to FTX fiat currency process
d) continuously monitor total deliverable assets, total customer positions and other key risk indicators;
e) Place more control over margin management.
And none of this changes the fact that this is all the worst for you guys and it’s not your fault. I’m so sorry about that. I will do everything in my power to help you and your customers for the rest of my life. But I’m still afraid that I won’t be able to go.
I would also like to thank everyone for the advice that I now believe to be true on the future path of FTX after the crash. Of course you were right. A month ago he would say FTX was a thriving, profitable, and innovative business. So FTX still has value, and that value could help make everyone more complete. About eight minutes after signing the Chapter 11 document, potential multi-billion dollar funding interest came in. Between those funds, the billions of dollars in collateral the company still holds, and the interest we received from other parties, we think we could have probably returned great value to our customers and saved our business.
Of course, a change would have been necessary. There had to be more transparency and more controls in place, including my own oversight. But FTX was really special. Nothing that happened was your fault. We had to make very difficult decisions very quickly. I’ve been in that position before and should have known that everyone tends to make irrational decisions when shitty things happen to us. Despite allegations, there was a great deal of coordinated pressure to file for bankruptcy of all of FTX, including its solvent entities. I understand and empathize with that pressure. Many people found themselves in a difficult situation, and it was generally not their fault. I wish I had heard from all of you who found value in the platform and still do, but that’s my belief.
There may still be a chance to save the company. I believe billions of dollars of genuine interest from new investors will lead to complete customers. Because it’s not my choice. In the meantime, we look forward to seeing some positive steps being taken, including re-enabling LedgerX.
We are so grateful for all you have done for FTX over the years. I will never forget it.
SBF”
