Sam Bankman-Fried apologizes for the FTX crisis

Sam Bankman-Fried has apologized for the crisis that has engulfed the financial empire and admitted that crypto exchange FTX does not have enough easily accessible funds to meet the $5bn wave of customer withdrawals.

In a series of tweets published on Thursday, Bankman-Fried said: “I’m sorry. That’s the biggest thing. I messed up, and should do better.”

Bankman-Goreng’s My fault comes as FTX, one of the world’s largest crypto trading venues, teeters on the brink of collapse. The 30-year-old executive on Thursday said the exchange had only $400 million in easily tradable US dollar assets to cover a record $5bn surge in redemption requests on Sunday.

He has believed in the crisis that the exchange had 24 times the average daily withdrawal of US dollar liquidity.

The admission by Bankman-Fried, whose personal wealth was estimated only a few months ago at $24bn, raised new doubts about whether customers would be paid at all. He said that the value of the group’s assets exceeds the client’s deposits, but that “liquidity varies widely, from very little to very little.”

“Every penny of that – and any collateral – will go directly to the user, unless or until we actually do it with them,” he vowed.

Bankman-Fried’s troubles began late last week when crypto industry publication CoinDesk reported that most of the assets backing executive trading house Alameda Research were in FTT, a coin issued by FTX.

The head of Binance Changpeng Zhao, a rival of Bankman-Fried, on Sunday said the exchange would liquidate its holdings of FTT, eliminate token sales and run FTX.

Bankman-Fried on Thursday said she plans to reduce trade in Alameda and also said she is ready to stand down as FTX leader.

Binance on Tuesday floated a deal to save FTX, but backed out a day later, citing concerns over FTX’s business practices and reporting an investigation by US regulators.

The US Securities and Exchange Commission has expanded its investigation into FTX, which includes examining the platform’s cryptocurrency lending products and management of customer funds, people familiar with the matter said.

Wall Street regulators launched the probe months ago but are seeking additional information after Binance’s acquisition plan was announced on Tuesday, the person added. The SEC is also investigating 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, “is fine”. A few hours later, the FTX.US website announced that trading on the platform could be halted within days and urged users to close any positions they wanted to close. “It was withdrawn and will remain open,” he added.

The crisis in FTX has also been managed to blow prominent investors.

Venture capital firm Sequoia Capital said it would mark down its $214mn investment in FTX to zero after the exchange’s run in recent days blew a huge hole in its balance sheet and raised serious doubts about its safety. “In recent days, the liquidity crunch has created a solvency risk for FTXSequoia said in a note Wednesday to investors in its fund.

Other backers including SoftBank, Tiger Global, BlackRock and hedge fund managers Paul Tudor Jones and Izzy Englander also suffered losses.

‘It’s too crazy’: Customers weigh in

The crisis in the crypto exchange FTX has left thousands of customers bracing for losses, with some directing anger at the company’s founder Sam Bankman-Fried.

Users can’t withdraw funds for several days, and the company’s website is now “very down.”[ing]”Users do not deposit money.

“It’s too crazy,” said Matthias, 21, who said he had $1,700 stuck at the exchange. “FTX has a big following and a big reputation. The whole situation is going to make crypto as a whole look more unstable, so [decentralised finance] more or less unusable.”

“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. “That’s all I’ve done in the last six months. . . I believe [FTX and Bankman-Fried] but it seems all is lost.”

Nikou Asgari

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