FTX’s Sam Bankman-Fried posted Thursday morning that he is “sorry”, admitting that he “stepped up” and “should have done better”. Bankman-Fried also announced that he will close Alameda Research, the trading firm he co-founded with FTX.
The post comes as the one-time hero of the crypto sector seeks billions of dollars to avoid bankruptcy. It’s been a quick fall from grace for FTX this week. Earlier this year, the exchange was valued at $32 billion, but now Bankman-Fried is again looking for someone to stop FTX after rival exchange Binance pulled out of a deal to buy it.
“I also should have communicated more lately,” Bankman-Fried wrote. “Transparently – my hands were tied for the duration of the potential Binance deal; I wasn’t particularly allowed to say too much publicly. But of course we ended up there in the first place.”
The CEO of FTX also gave the latest on how things stand with his heavyweight crypto exchange.
Excluding its U.S. business, Bankman-Fried said the international operation has a total market value of assets and collateral that is higher than customer deposits, but he said it is “different from liquidity for distribution — as you can distinguish it from the condition of withdrawals.”
“The full story here is one that I’m still figuring out every detail, but as a very high level, I was done twice,” Bankman-Fried wrote.
The FTX CEO said his first mistake was poor internal labeling of bank-linked accounts, which meant he was “fundamentally out of order” in his sense of user margin. “I thought it was much lower.”
He said the exchange saw roughly $5 billion in withdrawals on Sunday, which he called “the largest by a wide margin.”
By Wednesday, Bankman-Fried told investors the company was facing a shortfall of at least $8 billion and needed emergency financing, according to a person familiar with the matter.
In Thursday’s tweet, Bankman-Fried said his No. 1 priority “so far” is to “do good by users.” To that end, he said, the team is spending the week doing everything it can to increase liquidity.
“I can’t make any promises about that,” he said. “But I’ll try.”
“Every penny of this — and of the existing collateral — will go directly to the users, unless or until we’ve done right by them,” he vowed on Thursday.
“After that, investors — old and new — and employees who have fought for what’s right for their careers and who weren’t responsible for any of the f–ups.”
Bankman-Fried also said he is in talks with a number of players about next steps.
The company announced on Thursday that it had reached an agreement with the Tron network to create a special facility to allow holders of certain tokens to exchange their assets from FTX to external wallets at a 1:1 rate.
The exact capacity of that facility will be determined on a weekly basis.
Alameda Research, the quantitative trading firm closely associated with FTX, contributed to the stock market’s collapse this week.
“They operate an exchange and a back-end shop, which is super unorthodox, and it’s just not allowed in the regulated capital markets,” said Nic Carter, founding partner of Castle Island Ventures, of the relationship between the two entities, both owned by Bankman. -Fried.
Leaked financials published by CoinDesk on November 2 revealed the close relationship between the two entities. The report showed that most of Alameda’s assets were reported to be in FTT, the original symbol of FTX, and that Alameda had $14.6 billion in assets against $8 billion in liabilities.
FTT fell in value after the revelation, even after Alameda CEO Caroline Ellison said the information circulating on the firm’s balance sheet relates to “a subset” of its corporate units and excludes an additional $10 billion in assets.
After a clash with Bankman-Fried on Twitter, Binance CEO Changpeng Zhao announced that his company was offloading FTT from its books, leading to an uproar at the popular FTX exchange and a liquidity crisis.
FTT, which peaked at around $78 in September 2021, was trading at close to $25 a day before Zhao’s tweets. It fell below $16 on Monday and then fell off a cliff after the deal was announced on Tuesday. The token is currently trading at around $3.80.
“The fact that FTT is such a large part of their collateral that they use to get loans on other platforms, that’s all really questionable stuff,” Carter said.
FTX said in an email to CNBC that the tweets are the only official statements FTX will release at this time. CNBC reached out to the Sun but did not immediately return a request for comment.
— CNBC’s Ryan Browne and Kate Rooney contributed to this report.
