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Bankman-Fried Apologizes to FTX Employees, Details Amount of Leverage in Internal Letter

WikiBit 2022-11-23 17:49

Abstract:The former FTX CEO made no mention of customer funds being misappropriated or other recent FTX revelations.

  FTX founder and former CEO Sam Bankman-Fried “froze up in the face of pressure” as his company failed, he wrote in a new letter to former employees.

  Bankman-Fried stated in the letter, which was shared internally on FTX's company Slack and obtained by CoinDesk, that he was “deeply sorry about what happened” and what it meant for the company's employees. He did not respond to allegations that FTX diverted customer and corporate funds to support Bankman-Alameda Fried's Research, revelations that Alameda was exempt from FTX's normal liquidation process, or statements that Alameda had loaned funds to FTX officials, including himself.

  “I didn't intend for any of this to happen, and I would give anything to be able to go back in time and redo things. You were like family to me ”He stated. “I've lost that, and our old house is now a monitor warehouse. There's no one left to talk to when I turn around.”

  “In the face of pressure, leaks, and the Binance [letter of intent to purchase FTX], I froze up and said nothing,” he explained.

  Bankman-Fried resigned as CEO of FTX on November 11, just before the company declared bankruptcy. He is not a current employee of the company, according to new CEO John Ray III, after Bankman-Fried tweeted multiple threads about the company and spoke to a reporter about it. Because Bankman-Fried no longer has access to the company Slack, a current employee posted Tuesday's letter to FTX employees.

  According to Bankman-Fried, FTX had around $60 billion in collateral and $2 billion in liabilities this spring, but the collateral's value was halved due to a market crash.

  Because of the industry's “drying up,” FTX's collateral was worth around $25 billion, though his liabilities increased to $8 billion.

  Another crash in November “led to another roughly 50% reduction in the value of collateral in a very short period of time,” he estimated at the time, valued at $17 billion.

  The bank run in November, caused by what Bankman-Fried called “attacks,” reduced another $8 billion in collateral, he said.

  “As we frantically put everything together,” he explained, “it became clear that the position was larger than its display on admin/users, due to old fiat deposits before FTX had bank accounts.” “I was unaware of the full extent of the margin position, nor of the magnitude of the risk posed by a hyper-correlated crash.”

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