FTX’s Sam Bankman-Fried tweeted Thursday morning that he is “sorry,” admitting that he “f—ed up” and “should have done better.” Bankman-Fried also announced that he is winding down Alameda Research, the trading firm he co-founded alongside FTX.
The post comes as the one-time hero of the crypto sector begs for billions of dollars to stave off bankruptcy. It has been a swift fall from grace for FTX this week. Earlier this year, the exchange was valued at $32 billion, but now, Bankman-Fried is again looking for someone to backstop FTX after rival exchange Binance pulled out of a deal to acquire it.
“I also should have been communicating more very recently,” wrote Bankman-Fried. “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.”
The FTX CEO also provided the latest on where things stand with his beleaguered crypto exchange.
Excluding its U.S. business, Bankman-Fried says that its international operation has a total market value of assets and collateral that is higher than client deposits, but he says that is “different from liquidity for delivery–as you can tell from the state of withdrawals.”
“The full story here is one I’m still fleshing out every detail of, but as a very high level, I f—ed up twice,” wrote Bankman-Fried.
The FTX CEO says his first mistake was poor internal labeling of bank-related accounts, which meant that he was “substantially off” on his sense of users’ margin. “I thought it was way lower.”
On Sunday, he says the exchange saw roughly $5 billion of withdrawals, which he called “the largest by a huge margin.”
Bankman-Fried says his number one priority “by far” is “doing right by users.” To that end, he says that he and the team are spending the week doing everything they can to raise liquidity.
“I can’t make any promises about that,” he said. “But I’m going to try.”
Alameda and the FTX death spiral
Alameda Research, the quantitative trading firm closely affiliated with FTX, contributed to the exchange’s death spiral this week.
“They operate an exchange and a prop shop, which is super unorthodox, and just not really allowed in actually regulated capital markets,” said Nic Carter, founding partner of Castle Island Ventures, of the relationship between the two Bankman-Fried-owned entities.
Leaked financials published by CoinDesk late last week laid bare just how close the sister companies are. The report showed that most of Alameda’s assets were reportedly in FTT, FTX’s native token, and that Alameda had $14.6 billion of assets against $8 billion of liabilities.
FTT subsequently plunged in value following the revelation, even after Alameda CEO Caroline Ellison said information circulating on the firm’s balance sheet related to “a subset” of its corporate entities and excluded $10 billion of additional assets.
After sparring with Bankman-Fried on Twitter, Binance CEO Changpeng Zhao announced his company was offloading the FTT on its books, leading to a run on the popular FTX exchange and a liquidity crisis.
FTT, which peaked at around $78 in September 2021, was trading at close to $25 the day before Zhao’s tweets. It plunged below $16 on Monday and then fell off a cliff after the deal was announced Tuesday. The token is currently trading at around $3.80.
“The fact that FTT is such a big part of their collateral that they use in order to get loans on other platforms, those are all really questionable things,” continued Carter.
Next steps
The FTX chief also says he’s in talks with a number of players about the next steps.
“Every penny of that–and of the existing collateral–will go straight to users, unless or until we’ve done right by them,” he pledged in his Thursday tweet thread.
“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 f— ups.”
Hours after Binance called off its deal to acquire FTX, Justin Sun — the founder of the cryptocurrency tron — tweeted at 10 P.M. on Wednesday that he was “putting together a solution” with Sam Bankman-Fried’s crypto exchange FTX to “initiate a pathway forward.”
Sun was light on the details of the arrangement, but he said that his team has been “working around the clock to avert further deterioration” and added that he had faith that the situation was “manageable” following the “wholistic approach” that he was assembling with his partners.
Though Bankman-Fried retweeted the post, it is unclear whether Sun plans to acquire FTX in a deal similar to the one announced with Binance earlier this week — or if he is just working to bail out those holding the tron token on the beleaguered exchange.
It is also possible that the message materializes in no action whatsoever.
The Chinese-born businessman has been involved in numerous controversies and publicity stunts in the past. In 2019, he paid $4.6 million to have lunch with Berkshire Hathaway CEO Warren Buffett, only to then cancel abruptly. The lunch eventually took place in 2020. He has been accused of unscrupulously copying other technologies, including the ethereum blockchain and the collapsed algorithmic stablecoin terraUSD, for his own endeavors, as CNBC previously reported.
FTX said in an email to CNBC that what has been shared via Twitter are the only official statements FTX will be issuing at this time. CNBC reached out to Sun but did not immediately hear back to our request for comment.
This is a developing story. Please check back for updates.
— CNBC’s Ryan Browne contributed to this report.
Image and article originally from www.cnbc.com. Read the original article here.