Sam Bankman-Fried Shuts Down Alameda and Apologizes for String of Mistakes At FTX
The billionaire CEO of embattled crypto exchange FTX has taken to Twitter to issue a string of mea culpas and accept responsibility for the company's downfall, which he is still hoping to prevent through financing appeals to companies like Kraken. He also announced sister trading company Alameda Research would be shutting down.
On Thursday, FTX U.S. Derivatives assured customers that the company was leaving parent firm FTX and would “soon be entirely separate” from the crypto exchange.
Among his chief failures triggering FTX's near-bankruptcy, Bankman-Fried says, was his lack of transparency and communication around the company's finances. This prompted him to pledge "radical transparency" in a future project, although it was not clear how the disgraced CEO would be in a position to helm such an endeavor in the future.
Earlier this week, FTX faced the possibility of an acquisition by the world's largest crypto exchange, Binance, that fell through after Binance's CEO said the company was more or less unsalvageable. This quickly sent crypto markets into a tailspin, wiping more than a $1 billion from the markets.
As Bankman-Fried to explain it, the crux of the problem at the firm was that the total market value of assets and collateral were "higher than client deposits."
"Of course, it's on me that we ended up there in the first place," Bankman-Fried said.
"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," he explained.
Bankman-Fried also acknowledged that he was not a "good developer" and his explanations on social media should not be misconstrued.
Kraken CEO Jesse Powell, who is evaluating a potential cash infusion to the embattled exchange, said there were "red flags" in the company's books. Kraken, which has 9,000 of the company's native token on FTX, was not exposed to Alameda Research, the company confirmed this week. (FTT's, FTX's token, plummeted to a low of $2.05 this week.)
Among the red flags listed by Powell in a blistering Tweet were Bankman-Fried's "ego purchase" of the American Airlines Arena in Miami, Florida for an eye-watering sum, frequent trips to DC to "buy political favor" and generally "being overeager to please D.C.," along with his quest for unctuous media coverage. It did not help that he also acted as if he "knew everything after showing up to the battle eight years late," Powell pointed out.
Bankman-Fried said that he would ensure that if FTX is properly financed, all funds will return to the pockets of users. "Every penny of that, and of the existing collateral, will go straight to users, unless or until we've done right by them," he underlined on Twitter. "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."
