Bankman-Fried issues Mea Culpa in letter to former FTX employee

Sam Bankman-Fried said former FTX employees that the excessive borrowing by his own trading company Alameda Research was responsible for the decline of FTX, and insisted that he was not aware of the margin positions received by the dealers.

In a letter to former employees, the FTX founder wrote that he "did not recognize the full extent of the margin position, I have still recognized the extent of the risk that starts from a hyper-correlated crash".

ftx generally allowed customers to borrow money to strengthen their bets on cryptocurrencies. But this practice made it possible to take particularly large positions that Bankman-Fried claimed that he had not monitored it.

According to the letter that the Financial Times viewed, Alameda entered the crypto crash this spring after lying $ 2 billion from FTX, which were allegedly covered by $ 60 billion in collateral. But when Bankman-Fried's cryptocurrency empire collapsed, this borrowing had risen to $ 8 billion and was covered by assets worth only $ 9 billion.

"I regret my oversight.

The letter sent to the employees of his companies contains the most detailed report by Bankman-Fried about how FTX has plunged into bankruptcy in less than two weeks by one of the best-known names for digital assets.

On Tuesday before, lawyers of the new managers of FTX Bankman-Frieds Management of the cryptoconglomerate insulted and told a US bankruptcy court in Delaware that the former billionaire had conducted his company as a "personal fief" and that the group had issued "considerable amounts of money". On objects that have nothing to do with business, such as B. holiday homes on the Bahamas. Earlier bankruptcy applications have pointed out "abuse of customer money".

Bankman-Fried said that the crash of the token prices and the “drying out” of the loans in the markets for digital assets after the collapse of the StableCoin Terra collaborated from Alameda from around $ 60 billion to $ 25 billion.

The position deteriorated in November due to a "hyper -correlated crash". . . Over a very short period of time ”, an obvious allusion to the drop in the price of FTX's own crypto token FTT at the beginning of this month, after Coindesk, a intelligence service that deals with digital currencies, revealed the central role that it played in the balance of Alameda. Shares to sell coin.

The extent of the problem was increased because Alameda held customer funds of $ 8 billion, which belonged to FTX. Bankman-Fried said that Alameda had these FTX customer funds because it received cash from them before the stock exchange had its own bank account. Several FTX customers have informed the FT that they have transferred money to Alameda that should later be used on the stock exchange.

"When we hectically put together everything, it became clear that the position was greater as his advertisement on admin/users, because of old [cash] before FTX had bank accounts," said Bankman-Fried.

The assets of Alameda included large investments in risk capital and crypto token, which could not be converted quickly into cash.

Bankman-Fried said he regretted that he has brought the entire crypta group into bankruptcy after Chapter 11, "even payable companies", and apologized to customers and his former employees.

"You were my family," he wrote. "I have lost it, and our old home is an empty camp full of monitors. When I turn around, there is no one there anymore."