Sam Bankman-Fried, Co-Founder and CEO of FTX, in Hong Kong, China, May 11, 2021.
Lam Yik | Bloomberg | Getty Images
Sam Bankman-Fried, the former CEO of FTX, blamed his “illogical decisions” on “sh—y” situations in a letter sent to employees of the bankrupt cryptocurrency exchange, obtained by CNBC.
Bankman-Fried said the crypto empire was “frozen in the face of pressure and leaks” as investors quickly lost confidence and customers quickly withdrew billions of dollars from the platform.
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“In the rush of growing the company, I lost track of the most important things. I care about all of you and you were my family, and I’m sorry,” the letter continued.
“It’s too little too late,” a current FTX employee told CNBC. “I’ve never seen an empathic version of Sam, so I can’t imagine he’ll change his tune now.”
Bankman-Fried did not immediately respond to a request for comment.
Bankman-Fried’s obituary for employees describes the former CEO’s reaction to the events leading up to it. The ultimate downfall of FTX, together with approximate accounting. The cryptocurrency exchange was valued at $32 billion Filing for Chapter 11 bankruptcy protection in about a week.
While Bankman-Fried accepted blame for the turn of events, he still seemed confident that the crypto empire was close to bailing out in the final hours before it entered Chapter 11 bankruptcy protection.
“We likely could have raised significant financing; potential interest in billions of dollars in financing came in about eight minutes after I signed the Chapter 11 papers,” Bankman-Fried wrote.
“Between these funds, the billions of dollars in collateral the company still holds, and the interest we received from other parties, I believe we could probably return significant value to customers and save the business,” the letter continued.
Read Bankman-Fried’s full letter below.
Read Bankman-Fried’s full letter
“Hello to everybody-
I am very sorry for what happened. I’m sorry for what happened to all of you. And I feel sorry for what happened to the customers. You did your best for FTX and stood by the company and me.
I didn’t want any of that to happen and I would give anything to be able to go back and do it all over again. You were my family. I’ve lost it, and our old house is an empty monitor warehouse. When he returned, there was no one left to talk to. I let you all down and failed to communicate when things went wrong. I froze in the face of the pressure, the leak and the Binance LOI and said nothing. I lost track of the most important things in the confusion of the company’s growth. I care about you all so much and you were my family and I’m sorry.
I was the CEO and so it was my job to make sure the right things were happening at FTX. I wish I had been more careful.
I want to describe to you better what happened – I should have written it as I understood it earlier.
Having recently put everything together, made some rough calculations – I can’t get the full data right now to get exact answers – and marketed everything regardless of liquidity, I believe the events that led to this month’s collapse include:
1) The crash that caused the value of collateral in the markets to drop by about 50% this spring;
The. ~$60B collateral, ~$2B liabilities -> ~$30B collateral, ~$2B liabilities
2) Most of the credit in the industry dries up at once;
The. ~$25 billion in collateral, ~$8 billion in liabilities
3) A concentrated, hyper-correlated crash in November that caused collateral value to fall by nearly 50% in a very short period of time;
The. ~$17b in collateral, ~8b in liabilities
4) A bank run caused by the same attacks in November;
The. ~$9 billion in collateral
5) When we frantically put it all together, it turns out that the position is larger than shown in admin/users due to old fiat deposits before FTX had bank accounts:
The. ~$9b collateral, ~$8b liability
I never thought this would happen. I didn’t realize the full extent of the margin position, and I didn’t realize the magnitude of the risk posed by the hypercorrelation crash. Loans and secondary sales have generally been used to reinvest in businesses, including the purchase of Binance, rather than for large amounts of personal consumption.
I am very sorry for my failure in control. Looking back, I wish we had done a lot of things differently. To name a few:
a) be highly skeptical of large margin positions
b) examining stress test scenarios involving hyper-correlated crashes and simultaneous runs in a bank
c) To be more careful about fiat processes in FTX
d) having continuous monitoring of total deliverable assets, total customer positions and other key risk measures
e) Putting more control over margin management.
And none of that changes the fact that this is all bad for you guys and it’s not your fault and I’m so sorry for that. I will do my best to fix this for you and the customers, even if it takes the rest of my life. But I’m worried that even then I won’t be able to.
I also want to acknowledge those who have given me what I now believe to be sound advice about ways forward for FTX after the accident. Of course, you were right: I believe that a month ago FTX was a thriving, profitable, innovative business. This means that FTX still had value, and that value could help make everyone more whole. We could probably raise significant funding; billions of dollars in potential interest came about eight minutes after I signed the Chapter 11 papers. Between those funds, the billions of dollars in collateral the company still holds, and the interest we received from other parties, I think we probably could have returned a lot of value to customers and salvaged the business.
Of course, there had to be changes: more transparency and more control, including my own. But FTX was something really special and you all helped make it happen. Nothing that happened was your fault. We had to make some very difficult calls very quickly. I’ve been in this position before, and I should have known that when bad things happen to us, we all tend to make irrational decisions. Despite the claims of other jurisdictions, there has been an overwhelming amount of coordinated pressure to bankrupt all FTCs, even those that are solvent. I understand and empathize with this pressure; many people were thrown into predicaments, generally through no fault of their own. Although I should have known better, I reluctantly yielded to this pressure; I wish I had listened to those of you who saw and still see value in a platform that I believe in.
Perhaps there is still a chance to save the company. I believe that the new investors have a genuine interest in the billions of dollars that will go towards integrating customers. But I can’t promise you that something will happen because it’s not my choice. In the meantime, I’m excited to see some positive steps being taken, such as the relaunch of LedgerX.
I am incredibly grateful for all you have done for FTX over the years and will never forget it.
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