Sam Bankman-Fried apologizes for FTX crisis

Sam Bankman-Fried apologized for the crisis that engulfed his financial empire and admitted that crypto exchange FTX did not have enough readily available funds to cope with a wave of customer withdrawals of $ 5 billion .

In a series of tweets posted on Thursday, Bankman-Fried said, “I’m sorry. This is the most important thing. I screwed up and should have done better.

Bankman Fried my culpa comes as FTX, one of the largest crypto trading sites in the world, is on the verge of collapse. The 30-year-old executive said on Thursday the exchange had just $400 million in readily tradable U.S. dollar assets to cover a record $5 billion surge in redemption requests on Sunday.

He had believed, as the crisis approached, that the stock market had 24 times the daily average of US dollar cash withdrawals available.

The admission by Bankman-Fried, whose personal fortune was estimated a few months ago at $24 billion, casts new doubt on the recovery of clients. He said the value of the group’s assets exceeded customer deposits, but “liquidity varies widely, from very to very little”.

“Every penny of this – and of the existing warranty – will go directly to users, unless or until we do the right thing,” he promised.

Bankman-Fried’s woes began late last week when crypto industry publication CoinDesk reported that much of the assets backing executive trading house Alameda Research were in FTT, a coin issued by FTX.

Binance chief Changpeng Zhao, Bankman-Fried’s arch-rival, said on Sunday that his exchange would liquidate its FTT holdings, triggering both a sell-off of the token and a run on FTX.

Bankman-Fried said Thursday that he plans to end his business activities at Alameda and also said he is ready to step down as head of FTX.

Binance launched a deal on Tuesday to save FTX, but backed down a day later, citing concerns about FTX’s business practices and reported investigations by US regulators.

The U.S. Securities and Exchange Commission has expanded an investigation into FTX, which includes reviewing the platform’s cryptocurrency lending products and the management of customer funds, a person familiar with the matter said.

The Wall Street regulator launched the investigation months ago, but sought additional information after Binance’s acquisition plans were announced on Tuesday, the person added. The SEC is also reviewing FTX’s relationship with a US entity, FTX US.

Bankman-Fried said Thursday that users of FTX.US, which is a separate entity from its main international exchange, are “doing well.” A few hours later, the FTX.US website announced that trading on the platform could be halted in a few days and urged users to close any positions they wanted to close. “Withdrawals are and will remain open,” he added.

The crisis at FTX has also dealt a blow to high-profile investors.

Venture capital firm Sequoia Capital said it would cut its $214 million investment in FTX to zero after a stock market run in recent days ripped a huge hole in its balance sheet and cast serious doubts on his survival. “In recent days, a liquidity crisis has created solvency risk for FTX,” Sequoia said in a note to investors for its fund on Wednesday.

Other backers, including SoftBank, Tiger Global, BlackRock and hedge fund managers Paul Tudor Jones and Izzy Englander, are also suffering losses.

“It’s too crazy”: customers weigh in

The crisis at crypto exchange FTX has left thousands of customers bracing for losses, with anger directed at the company’s founder, Sam Bankman-Fried.

Users were unable to withdraw their funds for several days, with the company’s website “strongly advising against[ing]” users not to deposit money.

“It’s way too crazy,” said Matthias, 21, who said he had $1,700 locked up on the exchange. “FTX had a big following and a big reputation. The whole situation is going to make the crypto as a whole more unstable, which makes [decentralised finance] more or less unusable.

“I feel like shit,” added Shadan Shoeb, 21, from India, who started trading on FTX in April and said he had $2,300 locked up on the exchange. “That’s all I’ve won in the last six months…I trust [FTX and Bankman-Fried] but it looks like all is lost.

Nikou Asgari

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