Sam Bankman-Fried sends an explanation letter to employees

Sam Bankman-Fried writes an explanation letter to employees

23.11.2022 13:08 (Updated 05.12.2022 13:12)
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by Yana Popenkova
3 min read

FTX founder Sam Bankman-Fried sent a letter to his former colleagues, citing his regret and shedding light on details of the firm’s collapse.

Sam resigned as the CEO of FTX on Nov 11, following the filing for Chapter 11 bankruptcy in the United States. Since then, SBF made a series of bold statements during the Vox interview on Twitter DM, including his regrets on filing for bankruptcy, disrespect for regulators, and uneasiness with the people who are now in charge of FTX “burning it all to the ground out of shame.”

The new CEO of FTX, John Ray III, shared no regrets about the bankruptcy decision. He told CNBC:

In my 40 years of legal and restructuring experience, I had never seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.

After almost two weeks, SBF sent an explanation letter to his former colleagues. He deeply regrets his performance as CEO and feels guilty before his team and clients. Sam pointed out that in the critical moment, he “froze up in the face of pressure,” journalistic leaks, and “from Binance.” Recall that Binance was going to acquire FTX, but after reviewing the firm’s balance sheet, they abandoned their decision. In the same conversation with a Vox reporter, SBF ironically referred to CZ, the CEO of Binance, as the new hero in the crypto industry.

Related: Your Favorite Crypto Digest From TradeCrypto.com #171

In the explanation letter, SBF gives precise details on FTX collapse, which started during this cycle with Terra LUNA collapse.

1) A crash in markets this spring that led to a roughly 50% reduction in the value of
collateral;

2) Most of the credit in the industry drying up at once;

3) A сoncentrated, hyper-correlated crash in November that led to another roughly 50%
reduction in the value of collateral over a very short period of time, during which there was very little market bid-side liquidity;

4) A run on the bank triggered by the same attacks in November;

5) As we frantically put everything together, it became clear that the position was larger than its display on admin/users, because of all fiat deposits before FTX had bank accounts.

However, Bankman-Fried is not addressing the allegations of loaning customers’ funds to Alameda, neither he’s detailing why illiquid tokens backed customers’ funds.

Related: FTX CEO Transferred Customer Deposits to Help His Other Company

Despite the bankruptcy filing and his stepping out as CEO, Bankman-Fried still believes there is a chance for FTX. “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.”

Author

  • Previously worked in the arts, now specializes in covering crypto with an emphasis on DeFi, blockchain and mass adoption. Offers simple and clear writing, always looking for new ways to present information. Major in International Relations, minor in English, in a spare time reads postmodern literature, does yoga and watches movies.

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