Sam Bankman-Roasted ‘Very Sorry’ In Letter To Former FTX Employees
Sam Bankman-Fried, founder and CEO of FTX Trading, apologized to employees in an internal letter this week explaining why the cryptocurrency exchange failed under his command. According to the letter, Bankman-Fried said she “passed out from the pressure and leaks” and said nothing when the FTX collapse began. FTX’s public troubles began on the weekend of November 7 when Binance CEO Changpeng Zhao announced plans to phase out the exchange’s FTT, which is FTX’s native crypto token.
That news came after leaked documents revealed that FTX and its sister company Alameda Research were involved in an unusual transaction and how FTT token loans were involved.
The announcement of the freeze led to rumors that FTX was bankrupt, which led to a surge in crypto exchanges by users looking to withdraw their assets. Soon, FTX ran into a liquidity crisis and withdrawals became difficult. Binance reached out with a “letter of intent” to acquire FTX to save solving the problem, but quickly backed off after looking at the company’s books and Zhao saying the exchange was beyond saving.
“I didn’t mean for anything to happen this time, and I would give anything to be able to go back and do things again. You were my family,” Bankman-Fried wrote in the accompanying letter received first by CoinDesk. “I lost that, and our old home is an empty warehouse. If I repent, there is no one to talk to.”
The letter is shared on the company’s internal Slack server. Since Bankman-Fried is no longer an employee of the company, she no longer has access to the conversation, and the letter was assigned to a current employee.
according to the book, FTX held about $60 billion (about Rs. 4,87,100 crore) and $2 billion (about Rs. 16,230 crore) in debt in the spring, but the market crash halved the amount. He said the company’s collateral has come down to around $25 billion (around Rs. 2,02,950 crore), while liabilities have quadrupled to $8 billion (around Rs. 64,940 crore). Another “concentrated, highly correlated” crash in November saw the stock fall to $17 billion (roughly Rs. 1,38,010 crore). And in the end, he said, the “run on the bank” caused by “the same attack” ended with a guarantee of $ 9 billion (about Rs. 73,060 crore).
“As we hurriedly put everything together, it became clear that the position was bigger than it looked to admin/users, due to old fiat deposits before FTX had bank accounts,” Bankman-Fried wrote. “I didn’t see the full extent of the margin, and I didn’t see the magnitude of the risk from the crash being so closely related.”
He added that excessive stress comes from making “hard calls very quickly” when the fall starts and that he has made irrational decisions as a result. He seems to regret the bankruptcy, as some of the companies that FTX says have resolved, and he believes that he could have saved the company as it was in the throes of death.
“A large amount of systematic pressure came, out of desperation, to file for bankruptcy of FTX – even the entities that were resolved – despite the claims of other authorities,” he wrote. “We probably could have gotten a big deal; the potential interest on the multi-million dollar deal came about eight minutes after I signed the Chapter 11 documents. Among those funds, billions of dollars in collateral the company is holding, and the interest we have.” received from other groups, I think we probably could have returned a lot of value to the customers and saved the business.”
Although the book describes the collapse of FTX and notes where the money went and why the collapse occurred during his tenure, he did not address some of the more controversial aspects of his command. These include examples such as allegations that FTX lent client money to its sister company Alameda Research, or leaked documents that revealed a strong relationship between the two companies involved in FTT tokens.
In her conclusion, Bankman-Fried says she hopes FTX can still be saved. “Maybe there is still a chance to save the company,” he said. “I believe there are billions of dollars of real interest from new investors who might make perfect customers. But I can’t promise you anything will happen, because it’s not something I chose.”