Here is the apology letter Sam Bankman-Fried sent to FTX staff
Sam Bankman-Fried, Founder and CEO of FTX, in Hong Kong, China, Tuesday, May 11, 2021.
Lam Yik | Bloomberg | Getty Images
Former FTX CEO Sam Bankman-Fried blamed his “irrational decisions” on “sh—y” circumstances in a letter obtained by CNBC sent to employees of the bankrupt crypto exchange.
Bankman-Fried said his cryptocurrency empire was “faced with pressure and leakage” as investors quickly lost confidence and customers quickly withdrew billions of dollars from the platform.
related investment news
“I did not monitor the most important things in the development of the company. I care about you all so much, you were my family, I’m sorry,” the letter continued.
“It’s too late,” a current FTX employee told CNBC. “I’ve never seen an empathetic version of Sam, so I can’t imagine he’ll change his tune now.”
Bankman-Fried did not immediately respond to a request for comment.
A post-mortem examination of Bankman-Fried employees describes the former CEO’s view of the events that led to this incident. The ultimate downfall of FTX, together with an accounting of approx. The crypto exchange was valued at $32 billion Filing for Chapter 11 bankruptcy protection in about a week.
While Bankman-Fried admitted blame for the turn of events, he appeared confident that he was close to saving his crypto empire in the final hours before entering Chapter 11 bankruptcy protection.
“Perhaps we could attract significant funding; interest in potential multibillion-dollar financing emerged within about eight minutes of signing the Chapter 11 documents,” Bankman-Fried wrote.
“Between these funds, the billions of dollars in collateral the company still holds, and the interest we received from other parties, I believe we could have returned significant value to customers and retained the business,” the letter continued.
Read Bankman-Fried’s full letter below.
I am very sorry for what happened. I’m sorry for what happened to all of you. I am sorry for what happened to the clients. You gave your all for FTX and stuck with the company and me.
I didn’t want any of that to happen and would give anything to go back and do it all over again. You were my family. I lost it, and our old house is an empty warehouse of monitors. When I turned around, there was no one left to talk to. I let you all down, and when things went wrong, I couldn’t talk. I froze in the face of the pressure and the leak and the Binance LOI and said nothing. I neglected the most important things in the company’s growth. I’m so worried about you all, you were my family, I’m sorry.
I was the CEO, so it was my job to make sure the right things happened at FTX. I wish I was careful.
I wish I could give you a better description of what happened – I should have written it as I understood it sooner.
Recently, putting things together, making approximations—I don’t have full access to the data right now to get exact answers—and marking everything to market regardless of liquidity, I believe the events that led to this month’s disruption include:
1) The fall in the markets this spring, which caused the value of collateral to fall by about 50%;
a. ~$60B Guaranteed, ~$2B Liabilities -> ~$30B Guaranteed, ~$2B Liabilities
2) Most of the credit in the industry dries up immediately;
a. ~$25 billion in guarantees, ~$8 billion in liabilities
3) November’s concentrated, hypercorrelation crash, which caused collateral values to drop another roughly 50% in a very short period of time, during which there was very little market-bid liquidity;
a. ~$17 billion in collateral, ~8 billion in liabilities
4) The bank run that sparked the same attacks in November;
a. ~ $9 billion guaranteed
5) When we frantically put everything together, it turned out that the position due to old deposits before FTX had bank accounts was larger than indicated in admin/users:
a. ~$9 billion in guarantees, ~$8 billion in liabilities
I never thought this would happen. I did not understand the full extent of the margin position, nor did I understand the magnitude of the risk that the hypercorrelation crash would create. Loans and secondary sales were generally used for reinvestment in businesses, including the Binance acquisition, and not for large amounts of personal consumption.
I’m very sorry for the oversight failure. Looking back, I wish we had done a lot of things differently. To name a few:
a) is very skeptical of large margin positions
b) study of stress test scenarios involving hypercorrelated crashes and simultaneous operations in the bank
c) Being careful with fiat processes in FTX
d) continuous monitoring of total delivered assets, total customer positions and other key risk indicators
e) Establish more control over margin management.
None of this changes the fact that all of this is bad for you, and it’s not your fault, and I’m truly sorry for that. I will do everything in my power to make it up to you and the customers, even if it means the rest of my life. But I’m afraid that I won’t be able to do it.
I would also like to acknowledge those who gave me what I thought was sound advice on ways to get to FTX after the crash. You are certainly right: a month ago I believe that FTX was a thriving, successful, innovative business. That said, FTX still had value, and that value could have helped make the whole thing whole. We would have raised a lot of money; About eight minutes after signing the Chapter 11 filings, potential interest in the multibillion-dollar financing emerged. Between those funds, the billions of dollars in collateral the company still holds, and the interest we’ve received from other parties, I think we could have returned a lot of value to our customers and saved the business.
Of course there had to be changes: more transparency and more control, including my own. But FTX was something truly special and you helped make it happen. Nothing happened was your fault. We had to make some very difficult calls very quickly. I have been in this position before and I should have known that we all tend to make irrational decisions when we are faced with bad situations. Despite demands from other jurisdictions, an excessive amount of concerted pressure came from desperation to force all FTXs into bankruptcy, even solvent ones. I understand and understand that pressure; many people have found themselves in difficult situations that were usually not their fault. I reluctantly yielded to this pressure, even though I should have known better; I would love to hear from those of you who have seen and are seeing value in the platform, which was and still is my belief.
Perhaps there is still a chance to save the company. I believe that the new investors have billions of dollars of real interest, and they can take clients as a whole. But I can’t promise you anything will happen because it’s not my choice. In the meantime, I’m glad to see some positive steps being taken, like LedgerX being re-enabled.
I am forever grateful for everything you have done for FTX over the years and I will never forget it.
#apology #letter #Sam #BankmanFried #FTX #staff