Sam Bankman-Fried apologizes for the collapse of FTX and the loss of $51 billion in collateral

Sam Bankman Fried, founder of now-collapsed cryptocurrency exchange FTX and Alameda Research, apologized to employees in a letter that outlined a collapse in “collateral” to $9 billion from $60 billion.

“I didn’t mean for any of this to happen, and I would give anything to be able to go back and do things again,” he wrote in the letter, which was sent to employees on Tuesday and obtained by Bloomberg News.

He said the downturn in digital asset markets in the spring saw collateral nearly halve to $30 billion, while liabilities amounted to $2 billion.

A combination of credit stresses, more virtual currency sell-offs and a “bank run”, he wrote, left $9 billion in collateral ahead of FTX’s November 11 bankruptcy. He said liabilities estimated at $8 billion by then.

“I didn’t realize the full extent of a margin position, nor did I realize how much risk a highly correlated crash poses,” Bankman-Fred said. He did not give precise details about the composition of the guarantee or the liabilities.

FTX and Alameda Research, both pillars of the cryptocurrency market, broke up with astonishing speed this month. Fund flows between a tangled network of FTX-linked entities are at the heart of whether the exchange misappropriated customer funds.

Bankruptcy proceedings so far have painted a picture of a company with unusually lax financial documentation and controls, with payment requests sanctioned by emojis in chat rooms and FTX money used to buy homes and other personal items for staff and advisors.

Bankman-Fried wrote that “potential interest in billions of dollars in financing came approximately eight minutes after I signed the Chapter 11 documents.”

And while he argued that it could have helped save FTX and returned “significant value” to customers, the court filings point to a chaotic organization with deep problems.

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