John Ray, the newly appointed CEO of FTX and chief restructuring officer, stressed that Sam Bankman-Fried (SBF) does not have a permanent role and does not speak on behalf of the bitcoin exchange and its affiliated companies.
(3/3) Mr. Bankman-Fried has no ongoing role at @FTX_Official, FTX US, or Alameda Research Ltd. and does not speak on their behalf.
— FTX (@FTX_Official) November 16, 2022
The top executive reminded that on November 11, SBF resigned from leadership positions in all organizations.
Ray could have responded to Bankman-Fried’s thread, in which he continued to reconstruct the chronology of the events of the FTX collapse and assess his actions.
19) Once upon a time—a month ago—FTX was a valuable enterprise.
FTX had ~$10-15b of daily volume, and roughly $1b of annual revenue. $40b of equity value.
And we were held as paragons of running an effective company.
— SBF (@SBF_FTX) November 16, 2022
He admitted that a company valued at $40 billion, with annual revenue of about $1 billion and a trading volume of $10-15 billion, had attained Silicon Valley gold-standard status, and he began to appear on magazine covers. This led to overconfidence and carelessness, added SBF.
The operations team took on leverage of $5 billion against $20 billion of collateral, which had correlations with other collateral and the platform. After that, “a historic crash occurred—more than 50% of customers left, and user trust was lost.”
“Roughly 25% of client assets were withdrawn each day ($4b). As it turned out, I was wrong: leverage wasn’t ~$5b, it was ~$13b. Leverage, bank run, a total collapse in asset value, all at once. That’s why you don’t need that leverage,” described Bankman-Fried.
23) Roughly 25% of customer assets were withdrawn each day—$4b.
As it turned out, I was wrong: leverage wasn’t ~$5b, it was ~$13b.
$13b leverage, total run on the bank, total collapse in asset value, all at once.
Which is why you don’t want that leverage.
—
— SBF (@SBF_FTX) November 16, 2022
The former FTX CEO pointed to regulators’ difficulties. He said they have to oversee an industry that grows faster than the expansion of their remit. SBF urged the creation of frameworks that would protect customers while giving them freedom.
Bankman-Fried said he no longer plans to play the role of the “good guy.” What matters is what you do, in practice, he explained.
In an interview with VOX, Bankman-Fried expressed regret about filing FTX’s bankruptcy. He said he should have continued efforts to seek funding. That would have preserved the chances of “restoring customers’ financial health after a month.”
According to him, the top priority for the rest of his life is now to raise $8 billion to return funds to FTX users. Its execution will require the consent of creditors and the bankruptcy court.
During the interview, SBF described an unauthorized withdrawal of funds from the platform as a “hacker attack” that could have been carried out either by a former employee or a malicious program.
Recently, the former FTX CEO revealed information about the value of FTX and Alameda assets.
On November 15, journalists from the WSJ reported that Bankman-Fried planned to raise funds despite FTX’s bankruptcy filing. According to the publication’s sources, the funds would be used to reimburse users.
As noted in filings, the platform has more than a million creditors.
On November 16 it emerged that a group of American investors filed a lawsuit against Bankman-Fried.
Earlier Fortune lawyers said that the US DOJ has what it takes to bring criminal charges against Bankman-Fried and other executives of the bankrupt exchange.
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