15 November 2022 was not the first time this month that Sam Bankerman-Fried (aka “SBF”), Co-Founder and former CEO of bankrupt crypto exchange FTX International, has admitted mistakes, but it might prove to be the most memorable one given what he revealed about himself, FTX, and Alameda Research.

On 10 November 2022, SBF took to Twitter to talk about how he had “f*ucked up” at FTX International:

He went on to say:

FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!). 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… The full story here is one I’m still fleshing out every detail of, but as a very high level, I fucked up twice. The first time, a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users’ margin. I thought it was way lower…

My sense before: Leverage: 0x USD liquidity ready to deliver: 24x average daily withdrawals Actual: Leverage: 1.7x Liquidity: 0.8x Sunday’s withdrawals Because, of course, when it rains, it pours. We saw roughly $5b of withdrawals on Sunday–the largest by a huge margin…

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… And so we are where we are. Which sucks, and that’s on me. I’m sorry…

On 11 November 2022, FTX International issued the following press release:

And here is how — on the same day — SBF announced the collapse of the FTX empire:

The following video from Wall Street Journal nicely summarizes how FTX went bankrupt:

Anyway, SBF, who — according to some reports — is currently “under supervision” by the authorities in the Bahamas, started a very strange threadon 14 November 2022, and when asked about it by the New York Times (NYT), he said that he was “improvising”.

On 15 November 2022, SBF resumed posting on the above Twitter thread, but this time he was more coherent:

He went on to say:

My goal—my one goal—is to do right by customers. I’m contributing what I can to doing so. I’m meeting in-person with regulators and working with the teams to do what we can for customers. And after that, investors. But first, customers…

My goal: a) Clean up and focus on transparency b) Make customers whole… few weeks ago, FTX was handling ~$10b/day of volume and billions of transfers. But there was too much leverage–more than I realized. A run on the bank and market crash exhausted liquidity. So what can I try to do? Raise liquidity, make customers whole, and restart…

Maybe I’ll fail. Maybe I won’t get anything more for customers than what’s already there. I’ve certainly failed before. You all know that now, all too well. But all I can do is to try. I’ve failed enough for the month. And part of me thinks I might get somewhere…

I know you’ve all seen this, but here’s where things stand today, roughly speaking. [LOTS OF CAVEATS, ETC.] Liquid: -$8b Semi: +$5.5b Illiquid: +$3.5b And yeah, maybe that $9b illiquid M2M isn’t worth $9b (+$1b net). OTOH–a month ago it was worth $18b; +$10b net… Truth and Beauty

But all of that was just appetiser compared to the feast that was served on 16 November 2022 when American journalist Kelsey Piper, who is “a senior writer at Future Perfect, Vox’s effective-altruism-inspired section on the world’s biggest challenges”, published a highly interesting report on the conversation she had with SBF — via Twitter DMs — on 15 November 2022, which shed much needed light on how SBF thinks and on the goings-on that lead to the collapse of the FTX empire and SBF’s fall from grace.

For example, on the subject of regulators, SBF reportedly told Piper: “f*** regulators… they make everything worse… they don’t protect customers at all…”

On 17 November 2022, Jesse Powell, Co-Founder (and former CEO) of crypto exchange Kraken, shared his thoughts on SBF’s conversation with Piper:

Here are a few other reactions to SBF’s confessions to Piper: