Sam Bankman-Fried Apologizes For FTX Crisis

Sam Bankman-Fried has apologized for the crisis engulfing his financial empire and admitted that cryptocurrency exchange FTX did not have enough easily accessible funds to weather the $5 billion customer withdrawal wave.

In a series of tweets published Thursday, Bankman-Fried said: “I’m sorry. This is the most important thing. I broke, and I should have been better.”

Bankman Fried Middle East and Africa neglect FTX comes as FTX, one of the world’s largest cryptocurrency exchanges, is teetering on the brink of collapse. The 30-year-old CEO said Thursday that the exchange had just $400 million of easily traded assets in U.S. dollars to cover a record $5 billion increase in redemption requests on Sunday.

In the lead-up to the crisis, it was believed that the exchange had 24 times the average daily withdrawal of liquidity in US dollars.

The admission of Bankman Fried, whose personal fortune was estimated just months ago at $24 billion, casts doubt on whether the clients will ever be full. He said the value of the group’s assets exceeded customer deposits, but that “liquidity varies widely, from very little to very little.”

“Every penny of that — and the warranties that exist — will go directly to users, unless or until we do it right,” he pledged.

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

Binance Chairman Changpeng Zhao, a arch-rival to Bankman-Fried, said on Sunday that his exchange would liquidate its holdings of FTT, triggering a sell-off in the token and a pullback on FTX.

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Bankman-Fried said Thursday that he intends to end trading in Alameda and also said he is ready to step down as leader of FTX.

Binance on Tuesday launched a deal to bail out FTX, but backed down a day later, citing concerns about FTX’s business practices and investigations by US regulators.

A person familiar with the matter said that the US Securities and Exchange Commission has expanded its investigation into FTX, which includes examining the platform’s crypto-lending products and managing client funds.

The source added that the Wall Street regulator launched the investigation months ago but requested additional information after Binance’s acquisition plans were announced on Tuesday. The Securities and Exchange Commission is also examining FTX’s relationship with a US entity, FTX US.

Bankman-Fried said Thursday that users of FTX.US, an entity separate from the main international exchange, are “fine.” Hours later, FTX.US announced that trading on the platform could stop in a few days and urged users to close any positions they wish to close. “Withdrawals are open and will remain open,” she added.

The crisis in FTX also dealt a blow to prominent investors.

Venture capital firm Sequoia Capital said it will cut its $214 million investment in FTX to zero after the stock exchange in recent days left a massive hole in its balance sheet and cast serious doubts on its survival. “In recent days, the liquidity crisis has created solvency risks FTXSequoia said in a note Wednesday to investors in its fund.

Other backers such as SoftBank, Tiger Global, BlackRock and hedge fund managers Paul Tudor Jones and Easy Englander are also facing losses.

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“It’s way too crazy”: customers weigh

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

Users have been unable to withdraw their funds for several days, with the company’s website now “highly recommended[ing]“Users not deposit money.

“It’s pretty crazy,” said Matthias, 21, who said he had $1,700 stuck on the stock exchange. “FTX has had a huge following and a huge reputation. The whole situation will make the cryptocurrency as a whole look unstable, making it unstable. [decentralised finance] Unusable more or less.”

“I feel like bullshit,” added 21-year-old Shadan Schwepp from India who started trading FTX in April. “That’s all I’ve made in the past six months… I’ve trusted [FTX and Bankman-Fried] But it seems that all is lost.”

Nico Asgari

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