In a series of tweets posted Thursday, Bankman-Fried said: “Sorry. That’s the biggest thing. I fucked up and I should have done better.” Bankman-Fried’s mea culpa comes as FTX, one of the world’s largest crypto exchanges, is on the brink of collapse. The 30-year-old executive on Thursday said the exchange had only $400 million in readily tradable US dollar assets to cover a record $5 billion surge in redemption requests on Sunday. He believed before the crisis that the stock market had 24 times the average daily drawdown of US dollar liquidity available. The admission by Bankman-Fried, whose personal fortune was estimated just months ago at $24 billion, casts fresh doubt on whether the clients will be whole. He said the value of the group’s assets exceeded customer deposits, but that “liquidity varies widely, from a lot to very little.” “Every penny of this – and of the existing collateral – will go straight to the users unless or until we get it right by them,” he promised. Bankman-Fried’s woes began late last week when crypto industry publication CoinDesk reported that a large portion of the assets backing the executive’s trading house Alameda Research were in FTT, a currency issued by FTX. Binance chief Changpeng Zhao, a arch-rival of Bankman-Fried, said on Sunday that his exchange would liquidate FTT holdings, sparking both a sell-off in the token and a run on FTX. Bankman-Fried said Thursday that he plans to end trading in Alameda and also said he was prepared to step down as leader of FTX. Binance on Tuesday initiated a deal to rescue FTX, but backed out a day later, citing concerns about FTX’s business practices and citing investigations by US regulators. The US Securities and Exchange Commission has expanded an investigation into FTX, which includes looking into the platform’s cryptocurrency lending products and management of client funds, a person familiar with the matter said. The Wall Street regulator began the investigation months ago, but sought additional information after Binance announced its takeover plans on Tuesday, the person added. The SEC is also looking into FTX’s relationship with a US entity, FTX US. Bankman-Fried on Thursday said users of FTX.US, which is a separate entity from its main international exchange, “are fine.” Hours later, the FTX.US website announced that trading on the platform may be suspended in a few days and urged users to close any positions they wish to close. “Withdrawals are and will remain open,” he added. The FTX crisis has also hit prominent investors. Venture capital firm Sequoia Capital said it will reduce its $214 million investment in FTX to zero after a stock market rally in recent days blew a huge hole in its balance sheet and cast serious doubt over its survival. “In recent days, a liquidity crisis has created a solvency risk for FTX,” Sequoia said in a note Wednesday to its fund’s investors. Other backers including SoftBank, Tiger Global, BlackRock and hedge fund managers Paul Tudor Jones and Izzy Englander are also facing losses.
‘It’s pretty crazy’: Customers weigh in
The crisis at crypto exchange FTX has left thousands of customers bracing for losses, with some turning their ire on the company’s founder Sam Bankman-Fried. Users have been unable to withdraw their funds for several days, with the company’s website “strongly advising[ing]” users to not deposit money. “It’s too crazy,” said Matthias, 21, who said he has $1,700 stuck in the stock market. “FTX had a big fan base and a great reputation. The whole situation will make crypto as a whole look more volatile, making [decentralised finance] pretty much useless.” “I feel like shit,” added 21-year-old Shadan Shoeb from India, who started trading on FTX in April and said he has $2,300 stuck on the exchange. “It’s everything I’ve made in the last six months. . . I trusted [FTX and Bankman-Fried] but it seems all is lost.’ Nikou Asgari Video: Bitcoin Mining: Is Watt Money? | FT position
