FTX co-founder Sam Bankman-Fried recently tweeted a series of contemplative messages to explain his side of the near-collapse of the crypto exchange.
Bankman-Fried has made it known that he is "sorry" for the sudden dip in the Bahamian cryptocurrency exchange, also saying that he "f***ed up" about a number of things, which he explained in the following tweets in his somber message thread.
What Happened
Just when we thought we had seen the worst crypto market meltdowns this year, one of the most prominent crypto exchanges saw its valuation plummet in a matter of days.
At the core of the issue is FTX's native token, FTT, which has been crushed in a massive sell-off, falling more than 80% in the last few days. This surge in withdrawal cost FTX about $6 billion, says multiple reports.
To prevent a total collapse, crypto exchange FTX compromised on a bailout deal with trade rival Binance. This is after a surge in withdrawals caused a "significant liquidity crunch."
As reported by CNBC, the exchange had a value of $32 billion earlier this year, but Bankman-Fried is now looking for a new backer for FTX after rival exchange Binance backed out of a deal to buy it.
Reuters points out that the downfall of FTX can be traced back to Bankman Fried's poorly managed decisions months earlier. The prominent crypto-trading figure has stepped in to save other crypto firms on the brink of collapse amid rising interest rates.
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The FTX fallout had a broader impact than many people initially expected. Based on a Financial Times report, Binance CEO Changpeng Zhao thinks that the public's confidence in the cryptocurrency industry has been "severely shaken" by FTX's near collapse.
Bankman-Fried Says
Going back to Bankman-Fried's Twitter lamentations, the FTX co-founder has flatly stated that he "should have done better."
1) I'm sorry. That's the biggest thing.
— SBF (@SBF_FTX) November 10, 2022
I fucked up, and should have done better.
The 30-year-old entrepreneur has also admitted to communication lapses and regrets not communicating updates frequently enough. He goes on to say that he was unable to be transparent quite so due to a potential deal with Binance.
Bankman-Fried also affirms that its international operation, excluding its US business, has a total market value of assets and collateral greater than client deposits, but that this is "different from liquidity for delivery-as you can tell from the state of withdrawals." SBF says.
5) The full story here is one I'm still fleshing out every detail of, but as a very high level, I fucked up twice.
— SBF (@SBF_FTX) November 10, 2022
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.
The CEO claims that his first mistake was the incorrect internal labeling of bank-related accounts, which caused him to be "substantially off" in his estimation of the margin of users. He adds that he believed the values to be lower.
SBF also claims that discussions for FTX's next steps are ongoing with a number of players.
This is a developing story.
The Aftermath
As per the BBC, the value of Bitcoin has dropped to a two-year downtrend after Binance pulled out of a deal to save its smaller rival. Bitcoin has dropped by more than 10% to its lowest level since November 2020.
Meanwhile, the stock market value of online trading platform Robinhood fell by more than 19%, while cryptocurrency exchange Coinbase fell by 10%.
