Published , by Donovan Erskine
Published , by Donovan Erskine
FTX CEO Sam Bankman-Fried was insistent that FTX and its assets were perfectly fine all the way up until it was announced that Binance would be acquiring the company in a last-minute bailout. After doing its due diligence, Binance backed out of the deal, essentially sealing FTX’s fate. Now, Bankman-Fried has issued a statement on everything that went down, and what happens next.
Sam Bankman-Fried addressed the public in a thread of tweets this morning. “I'm sorry. That's the biggest thing,” he said, opening the thread with an apology. “I fucked up, and should have done better.” He goes on to admit that he failed to properly communicate what was going on behind the scenes while FTX users were expressing concerns over the reported liquidity crunch. Bankman-Fried says that he wasn’t able to say much while the deal with Binance was being worked out, before it fell through.
The CEO shares an update on the status of FTX’s non-US operations, while assuring that users in the US are fine. “FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!). But that's different from liquidity for delivery--as you can tell from the state of withdrawals. The liquidity varies widely, from very to very little.”
He chalks up a lot of the current issues to some severe miscalculations on his part in regard to user margins. While he believed there was enough USD liquidity to deliver on 24-times the average daily withdrawals, in actuality, there was only enough to cover 0.8-times that number. He also reveals that $5 billion in assets were withdrawn from FTX this past Sunday.
It’s been a fast and strong fall from grace for FTX, which was just recently competing to be one of the biggest crypto exchanges. With Bankman-Fried saying that FTX’s future will depend heavily on what happens over the next week or so, we’ll be watching closely for updates.