The former CEO of the failed cryptocurrency exchange FTX, Sam Bankman-Fried, has written a letter to the exchange’s employees apologizing for the collapse of the exchange. Since its collapse, FTX has been under criticism for mismanaging user funds.
FTX founder writes a letter to employees
Bankman-Fried apologized for his failure to achieve oversight on the exchange, promising employees that he would do whatever he could to make it up to them and the customers. Bankman-Fried has also insisted that saving the exchange was possible had he not given in to pressure and filed for Chapter 11 bankruptcy.
He said that he received offers for billions of dollars worth of funding minutes after he had signed the Chapter 11 bankruptcy documents. He noted that this new funding, the collateral held by the company, and the interest received from other parties were enough to save the exchange.
“I reluctantly gave in to that pressure, even though I should have known better; I wish I had listened to those of you who saw and still see value in the platform, which was and is my belief as well,” he added.
In the letter, Bankman-Fried argued that FTX had robust fundamentals. He pointed to spring this year when the exchange had $2 billion in liabilities and $60 billion in assets. However, since then, he notes that two crypto price crashes resulted in the exchange’s assets losing value despite an influx of new users on the platform.
By November this year, FTX assets had plunged to around $17 billion. This was before a bank run on the exchange resulted in $8 billion worth of withdrawal requests filed within a few days.
In the letter, Bankman-fried failed to address the peculiar relationship between FTX and Alameda. Before the bank run on FTX, a leaked balance sheet of Alameda showed that the financial muscle of the crypto fund rested on FTT, a token created by the FTX exchange, which lacked extensive utility outside the FTX ecosystem.
Bankman-Fried has reiterated that he never intended for FTX to collapse, adding that he had no idea about the extent of the margin position and the huge risk posed by the recent crashes in the crypto market.
FTX bankruptcy proceedings begin
The FTX exchange filed for bankruptcy on November 11. The interim CEO of the exchange, John J Ray III, is overseeing the bankruptcy proceedings. He is a bankruptcy specialist that facilitated the unwinding of Enron. However, he has said that in his entire career, he had never seen anything worse than FTX.
The bankruptcy case for the FTX exchange started on Tuesday at a Delaware court. The hearings have already touched on how the FTX exchange was managed, with the company’s lawyers saying that Bankman-Fried ran FTX as his “personal fiefdom.”
FTX was one of the largest cryptocurrency exchanges and had a presence in multiple countries. The bankruptcy filing also included FTX US, which is FTX’s US affiliate. The exchange also had many corporate clients and investment companies that used the platform to access the growing cryptocurrency market.
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