On Wednesday (16 November 2022), Sam Bankman-Fried (aka “SBF” on social media platforms), the disgraced Co-Founder and former CEO of the insolvent crypto exchange FTX, explained how he wants to help.
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…“
FTX issued the following press release on 11 November 2022:
And here is how 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 thread two days ago, and when asked about it by the New York Times (NYT), he said that he was “improvising”.
On Tuesday (15 November 2022), SBF resume 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“
On 13 November 2022, IOG Co-Founder and CEO Charles Hoskinson talked about the collapse of SBF’s FTX empire.
During a Twitter Space co-hosted by Mario Nawfal, who is the Founder and CEO of IBC Group, Hoskinson had this to say about FTX:
“There are tribes in the institutional side of the cryptocurrency space and so you have like the Galaxies and you have Barry’s Grayscale and then you have the really big guys, like BlackRock, JPMorgan Chase, and Goldman Sachs.
“FTX was definitely a clique and in those circles you have like Three Arrows Capital and Voyager and and obviously everything Alameda touched, so Solana, there was an investment in Polygon. I think even Messari got an investment. There’s over a hundred and thirty companies that the tentacles of FTX touched and probably about 50 billion dollars of value in that entire circle and it looked like it’s a good old-fashioned Ponzi scheme, where basically they cook the books, they appeared to be a lot richer than they actually were.
“They amplified that by a flurry of acquisitions in trying to be the the crypto strong man during a bear market, alongside a lot of paid sponsorships like the relationship with Tom Brady and Giselle, you know, putting their name on arenas and these types of things, but at the end of the day, they owed a lot more and were leveraged a lot more than liquidity that they had on hand.
“And I guess Sam was playing a game of ‘well, as long as nobody pushes us too hard, when the bull market comes back, all these illiquid assets will become liquid, they’ll get a 10x or 20x, I can sell them, I can make everything right, and then I’m gonna walk away with like 30 billion dollars’. I mean, that’s let’s literally what Bernie Madoff had at the back of his mind and the 2008 financial crisis, basically, pushed it to a point where he could no longer hide the shell game that he was doing and he was basically forced to fess up and admit it.“