FTX’s Sam Bankman-Fried apologises to staff, says collateral plummeted by US$51 billion in crypto crash
- The founder of FTX and Alameda Research outlined in a letter the company’s financial troubles that he said started with the slide of digital assets this year
- After a sell-off in virtual coins and a ‘run on the bank’, FTX’s collateral was left at US$9 billion, down from US$60 billion, he said
Sam Bankman-Fried, disgraced founder of the now collapsed crypto exchange FTX and trading house Alameda Research, apologised to staff in a letter that outlined a crash in “collateral” to US$9 billion from US$60 billion.
“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,” he wrote in the message sent to employees on Tuesday and obtained by Bloomberg News.
A slide in digital-asset markets in spring roughly halved collateral to US$30 billion, while liabilities were US$2 billion, he said.
A combination of a credit squeeze, a further sell-off in virtual coins and a “run on the bank” left collateral at US$9 billion ahead of FTX’s November 11 bankruptcy, he wrote. The estimate for liabilities had reached US$8 billion by then, he said.
“I did not realise the full extent of the margin position, nor did I realise the magnitude of the risk posed by a hyper-correlated crash,” Bankman-Fried said. He didn’t give exact details on the make-up of the collateral or the liabilities.
FTX and Alameda Research, both one-time pillars of the crypto market, unravelled with astonishing speed this month. Flows of money between a tangled web of FTX-related entities are at the heart of whether the exchange misappropriated customer funds.
The bankruptcy proceedings so far have painted a picture of a business with unusually lax documentation and financial controls, with payment requests approved by emojis in chat rooms and FTX funds used to buy homes and other personal items for employees and advisers.
Bankman-Fried wrote that “potential interest in billions of dollars of funding came in roughly eight minutes after I signed the Chapter 11” documents.
While he argued that could have helped save FTX and return “large value” to customers, the court filings point to a chaotic organisation with deep problems.