Sam Bankman-Fried – founder and CEO of collapsed cryptocurrency exchange FTX – has offered a profuse apology for the spectacular failure of his company.
In a string of gushing explanations on Twitter the 30-year-old Californian spewed an emotion-laden series of apologetic messages to explain what went wrong with the exchange, and how he plans to attempt to fix it.
Trouble for the exchange began when a spat between Bankman-Fried and Changpeng ‘CZ’ Zhao, CEO and founder of rival exchange Binance, ordered the liquidation of almost $600 million of FTX tokens following accusations the FTX chief had been seeking government regulation agreements.
There were also rumours of potential insolvency surrounding SBF’s trading company Alameda Research when leaked accounts showed liabilities worth $8 billion, largely made up of unidentified loans.
On Tuesday, CZ sensationally announced Binance would buy FTX, but added it had to go through a lengthy due diligence process. That process didn’t turn out to be particularly lengthy as Binance dramatically announced last night that it would be pulling out of the deal to purchase FTX.
This afternoon, Bankman-Fried took to social media to apologise.
“I’m sorry. That’s the biggest thing. I ****** up, and should have done better,” he began.
“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.
“So here’s an update on where things are. [THIS IS ALL ABOUT FTX INTERNATIONAL, THE NON-US EXCHANGE. FTX US USERS ARE FINE!] [TREAT ALL OF THESE NUMBERS AS ROUGH. THERE ARE APPROXIMATIONS HERE.]
“The full story here is one I’m still fleshing out every detail of, but as a very high level, I ****** up twice. The first time, a poor internal labelling of bank-related accounts meant that I was substantially off on my sense of users’ margin. I thought it was way lower.”
He went on to explain he had made a grave error in estimating the liquidity leveraging and how they had severely underestimated the enormity of $5 billion in withdrawals on Sunday.
“And so I was off twice,” he continued.
“Which tells me a lot of things, both specifically and generally, that I was **** at. And a third time, in not communicating enough. I should have said more. I’m sorry – I was slammed with things to do and didn’t give updates to you all. And so we are where we are. Which sucks, and that’s on me. I’m sorry.
“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.”
The founder of the three-year-old exchange then revealed he was in talks with “a number of players” and had various letters of intent and terms of agreement.
“Every penny of that – and of the existing collateral – will go straight to users, unless or until we’ve done right by them,” he added.
“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 **** 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.”