Sam Bankman-Fried, the former CEO of FTX, said in a recent letter to the company's staff that he "froze up in the face of pressure" as his business failed.
In the letter, published internally on FTX's Slack, Bankman-Fried expressed his regret for what transpired and its implications on the business staff. (2)
He avoided questions on claims that FTX used client and business cash to support Bankman-Alameda Fried's Research, that Alameda was excluded from FTX's standard liquidation procedure, or that Alameda had lent money to FTX officials, including himself.
What Did Sam Bankman-Fried Say?
"I would give anything to be able to go back in time and change things, as I had no intention for any of this to occur. My family was you, "said he. "That is gone, and the place where we formerly lived is now a monitor warehouse. There is no one left to talk to when I turn around."
In response to pressure, leaks, and the Binance, he claimed he froze up!
The day before FTX filed for bankruptcy, on November 11, Bankman-Fried resigned as CEO of the company.
After Bankman-Fried tweeted numerous times and talked to a reporter about the business, new CEO John Ray III said he is not a current company employee. Since Bankman-Fried no longer has access to the business Slack, a current employee posted the letter to FTX staff on Tuesday.
SBF Gives Details About FTX's Leverage
Earlier in the Spring, FTX had $2 billion in liabilities and about $60 billion in collateral. Still, a market fall caused the value of the collateral to be cut in half, according to Bankman-Fried.
Due to the drying up of credit in the crypto sector, FTX's collateral was worth about $25 billion, despite an increase in his liabilities to $8 billion.
He estimated the value of the collateral at $17 billion at the time. But a subsequent crash in November eroded roughly 50% in collateral value within a very short period.
Another $8 billion in collateral was lost during the bank run, which Bankman-Fried attributed to "attacks" in November, he claimed.
Because of initial fiat deposits made before FTX had bank accounts, he explained that it became apparent as they hastily pulled everything together that the position was larger than it appeared to be on admin/users.
"Neither the enormity of the risk posed by a hyper-correlated crash nor the full size of the margin position were realized by me."
He said that he did not grasp the full nature of the margin position or the danger posed by a connected crash.
On Allegations of Appropriation of Funds
He claimed that the loans and secondary sales were used to reinvest in the firm, including buying out Binance, and not for significant personal expenditure.
Concerns about customer funds being transferred from FTX to Alameda, which were raised once more during the company's first bankruptcy hearing earlier on Tuesday, were not addressed by Bankman-Fried.
At the bankruptcy court in Delaware, James Bromley of Sullivan & Cromwell, who represented FTX, stated that significant money appears to have been transferred from other businesses under the FTX umbrella to Alameda, some of which was invested in cryptocurrency and technological enterprises.
"Significant sums of money were also spent on items that had nothing to do with the firm. As an illustration, one of the U.S. debtors is a company that bought Bahamas real estate for over $300 million, "explained Bromley. (2) "The majority of those real estate purchases, according to preliminary investigations, were tied to houses and holiday properties utilized by senior officials."
In the letter on Tuesday, he wrote that
"Maybe there is still a chance to save the company, I believe that there are billions of dollars of genuine interest from new investors that could go to making customers whole. But I can't promise you that anything will happen, because it's not my choice."