Sam Bankman-Fried apologises to FTX Employees, details amount of leverage in internal letter

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By  Nikhilesh De, Coindesk.com

23rd November 2022 – (Nassau) FTX founder and former CEO Sam Bankman-Fried “froze up in the face of pressure” as his company collapsed, he wrote in a new letter sent to employees of the company he once helmed.

In the letter, shared internally in FTX’s company Slack and obtained by CoinDesk, Bankman-Fried said he felt “deeply sorry about what happened” and what that meant for the company’s employees. He did not address allegations that FTX diverted customer and corporate funds to prop up Bankman-Fried’s Alameda Research, revelations that Alameda had an exemption from FTX’s normal liquidation process or statements that Alameda had loaned funds to FTX officials including himself.

“I didn’t mean for any of this to happen, and I would give anything to be able to go back and do things over again. You were my family,” he said. “I’ve lost that, and our old home is an empty warehouse of monitors. When I turn around, there’s no one left to talk to.”

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

Bankman-Fried stepped down as CEO of FTX on Nov. 11, right before his company filed for bankruptcy. He is not a current employee of the company, new CEO John Ray III has said after Bankman-Fried tweeted multiple threads and spoke to a reporter about the company. Tuesday’s letter to FTX employees was posted by a current employee, as Bankman-Fried no longer has access to the company Slack.

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

The “drying up” of credit in the industry further meant FTX’s collateral was worth around $25 billion, though his liabilities measurement jumped to $8 billion.

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

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

“As we frantically put everything together, it became clear that the position was larger than its display on admin/users, because of old fiat deposits before FTX had bank accounts,” he said. “I did not realise the full extent of the margin position, nor did I realise the magnitude of the risk posed by a hyper-correlated crash.”

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