Bankruptcy of the FTX exchange: the story continued
Sam Bankman-Fried, the boss of the FTX exchange, which in a few days became de facto bankrupt and dragged the entire market into the abyss, made a lot of excuses.
On this page
Having been rejected by the CEO of the Binance exchange, Sam Bankman-Fried does not lose hope to find other sponsors and new options to save FTX. This became known from insider sources close to the owner of the bankrupt exchange. After exiting the Binance game, Sam informed FTX staff that he was not aware of any caveats or obstacles to the takeover deal he sought to sign with CZ. Therefore, he is now “exploring all possible options” to save FTX.
Revelatory Tweets by Sam Bankman-Fried
The CEO of FTX decided to go “on stage” and wrote a series of tearfully insightful (careful, sarcasm!) tweets. It struck a person for frankness. In his 22 messages, he pointed out all the reasons and mistakes that prevented him from succeeding and saving the crypto exchange from collapse. In his messages, Sam also sincerely sought to convey to clients and partners how sorry and ashamed he was for the situation. Revelation numbering is identical to author numbering on Twitter. So, enjoy.
- I'm sorry. That's the biggest thing. I fucked up, and should have done better.
- I also should have been communicating more very recently. Transparently–my hands were tied during the duration of the possible Binance deal; I wasn't particularly allowed to say much publicly. But of course it's on me that we ended up there in the first place.
- I have news on this matter. Only the FTX International exchange has all the problems. FTX US users have no problems.
- FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!). But that's different from liquidity for delivery–as you can tell from the state of withdrawals. The liquidity varies widely, from very to very little.
- I still continue analyzing in detail why I screwed up so badly twice. One of the reasons is the mislabeled accounts, which caused me to deviate significantly from my sense of user margin. I thought it was much lower.
- I was also wrong about the understanding of the US dollar's leverage and liquidity, which we can allow to withdraw on average per day. On Sunday (November 6, 2022), users withdrew approximately $5 billion, and we were not ready for that.
- We maintained an inappropriate level of communication. I should have given you all the information, but since I was overwhelmed with work, I did not keep you updated with all the changes.
- And so we are where we are. Which sucks, and that's on me.
- Anyway: right now, my #1 priority–by far–is doing right by users. And I'm going to do everything I can to do that. To take responsibility, and do what I can.
- So, right now, we're spending the week doing everything we can to raise liquidity. I can't make any promises about that. But I'm going to try. And give anything I have to if that will make it work.
- There are a number of players who we are in talks with, LOIs, term sheets, etc. We'll see how that ends up.
- Every penny of that–and of the existing collateral–will go straight to users, unless or until we've done right by them. After that, investors–old and new–and employees who have fought for what's right for their career, and who weren't responsible for any of the fuck ups.
- Because at the end of the day, I was CEO, which means that *I* was responsible for making sure that things went well. *I*, ultimately, should have been on top of everything. I clearly failed in that. I'm sorry.
- So, what does this mean going forward? I'm not sure–that depends on what happens over the next week. But here are some things I know.
- First, one way or another, Alameda Research is winding down trading. They aren't doing any of the weird things that I see on Twitter–and nothing large at all. And one way or another, soon they won't be trading on FTX anymore.
- Second, in any scenario in which FTX continues operating, its first priority will be radical transparency–transparency it probably always should have been giving. Giving as close to on-chain transparency as it can: so that people know *exactly* what is happening on it.
- All of the stakeholders would have a hard look at FTX governance. I will not be around if I'm not wanted. All of the stakeholders – investors, regulators, users – would have a large part to play in how it would be run. Solely trust.
- But all of that isn't what matters right now – what matters right now is trying to do right by customers. That's it.
- A few other assorted comments: This was about FTX International. FTX US, the US based exchange that accepts Americans, was not financially impacted by this shitshow. It's 100% liquid. Every user could fully withdraw (modulo gas fees etc). Updates on its future coming.
- At some point I might have more to say about a particular sparring partner, so to speak. But you know, glass houses. So for now, all I'll say is: well played; you won.
- I may have misdescribed certain things, although I tried to be as transparent as possible.
- And, finally: I sincerely apologize. We'll keep sharing updates as we have them.
One can only assume that the words addressed to the “sparring partner” probably refer to CZ. Meaning that Sam blames him for discrediting FTX, although he does not take the blame off himself.
Currently, the owner of the FTX exchange continues to seek $9.4 billion to avoid bankruptcy and plug a hole in the budget to fulfill all obligations to investors.
It also became known today that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have taken an interest in the causes of the FTX exchange collapse, launching their own investigation. Another investigation was initiated by the Securities and Exchange Commission of the Bahamas, where the FTX exchange had a subsidiary called FTX Digital Markets. We’d like to remind you that the owner of the stock exchange and many of his top managers live in the Bahamas, where they’ve purchased prestigious real estate in the Albany elite closed complex.
How Sam Bankman-Fried plans to get out of this situation and whether he will be able to save the FTX exchange – we will find out in the near future.
The content on The Coinomist is for informational purposes only and should not be interpreted as financial advice. While we strive to provide accurate and up-to-date information, we do not guarantee the accuracy, completeness, or reliability of any content. Neither we accept liability for any errors or omissions in the information provided or for any financial losses incurred as a result of relying on this information. Actions based on this content are at your own risk. Always do your own research and consult a professional. See our Terms, Privacy Policy, and Disclaimers for more details.
Articles by this author
