“I Fucked Up” Apologizes Former Billionaire Behind Crypto Crash

Sam Bankman-Fried has apologized as the damage caused by the fall of his empire is still far from fully known.

His words were awaited by an entire industry still reeling from his fall. 

On November 8, shortly before lunchtime on Wall Street, Sam Bankman-Fried, the institutional face of the crypto sphere, announced that he had decided to sell his empire to his great rival Changpeng Zhao and his company Binance. 

The day before he was still saying that his businesses were fine, brushing aside doubts and speculations sparked by a news article saying that the cryptocurrency exchange FTX.com and trading platform Alameda Research were on the verge of insolvency.

Both firms are owned by Bankman-Fried.

Zhao had not taken the gloves in confirming the deal.

“This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding letter of intent, intending to fully acquire http://FTX.com and help cover the liquidity crunch,” Zhao wrote.

Binance Backs Out

Finalization of the deal was pending due diligence. And it didn’t take long since on November 9, Binance and Zhao announced that they were abandoning the deal because they discovered by opening the account books that the situation was more serious than expected.

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of http://FTX.com,” the firm said in a message posted on Twitter.

“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”

‘I’m Sorry’

This withdrawal from Binance leaves FTX, which was still valued at $32 billion in February, on the brink of bankruptcy. Bankman-Fried has told potential investors that his companies need an injection of $8 billion to meet their obligations, while many customers are clamoring for their money.

“I’m sorry,” Bankman-Fried wrote on Twitter on November 10, thus breaking a 2-day silence. “That’s the biggest thing.”

He added that: “I fucked up, and should have done better.”

“I also should have been communicating more very recently,” the former billionaire continued. “Transparently–my hands were tied during the duration of the possible Binance deal; I wasn’t particularly allowed to say much publicly. But of course it’s on me that we ended up there in the first place.”

He then gave an update on what will happen now, taking care to distinguish between FTX International, which represents 95% of the group’s income, and FTX US.

“FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!),” he said. “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 thus recognizes that the group is almost out of cash.

Raising Cash

He therefore acknowledges that FTX is almost out of cash, a situation caused by massive withdrawals from customers on November 6 after Binance announced its decision to sell for $500 million worth FTT, the cryptocurrency issued by FTX following press reports on the financial health of the group.

“We saw roughly $5b [illion] of withdrawals on Sunday–the largest by a huge margin,” Bankman-Fried said.

“And so I was off twice. Which tells me a lot of things, both specifically and generally, that I was shit at. And a third time, in not communicating enough. I should have said more. I’m sorry–I was slammed with things to do and didn’t give updates to you all,” he said.

Bankman-Fried said the future looks uncertain. He will try to raise liquidity but does not promise that he will succeed.

“There are a number of players who we are in talks with,” He wrote. “We’ll see how that ends up.”

If he does not succeed, there will only be one solution left: bankruptcy. 

“Every penny of that–and of the existing collateral–will go straight to users, unless or until we’ve done right by them. After that, investors–old and new–and employees who have fought for what’s right for their career, and who weren’t responsible for any of the fuck ups.”

The sudden downfall of Bankman-Fried sent shockwaves through the cryptocurrency market. Bitcoin fell 17% on November 9, while stocks of crypto companies like Coinbase  (COIN) – Get Free Report, Microstrategy  (MSTR) – Get Free Report and Robinhood  (HOOD) – Get Free Report lost more than 20% each in the past two trading sessions.

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