“I lost track of the most important things in the commotion of company growth. I care deeply about you all, and you were my family, and I’m sorry,” SBF wrote within the
letter obtained by CNBC.
FTX’s collapse ha left an estimated a million collectors dealing with losses totalling billions of {dollars}.
“An extreme amount of coordinated pressure came, out of desperation, to file for bankruptcy for all of FTX—even entities that were solvent — and despite other jurisdictions’ claims,” Bankman-Fried wrote.
Here is the total textual content of Bankman-Fried’s letter:
Hi all—
Discover the tales of your curiosity
I really feel deeply sorry about what occurred. I remorse what occurred to all of you. And I remorse what occurred to clients. You gave all the things you might for FTX, and stood by the corporate—and me.
I didn’t imply for any of this to occur, and I might give something to have the ability to return and do issues over once more. You had been my household. I’ve misplaced that, and our outdated house is an empty warehouse of displays. When I flip round, there’s nobody left to speak to. I disenchanted all of you, and when issues broke down I failed to speak. I froze up within the face of strain and leaks and the Binance LOI and mentioned nothing. I misplaced observe of an important issues within the commotion of firm progress. I care deeply about you all, and also you had been my household, and I’m sorry.
I used to be CEO, and so it was my obligation to ensure that, finally, the best issues occurred at FTX. I want that I had been extra cautious.
I need to provide you with a greater description of what occurred—one I ought to have written out as greatest I understood it a lot earlier.
Piecing issues collectively lately, making approximations—I don’t have full knowledge entry proper now to get exact solutions—and marking all the things to market, no matter liquidity, I imagine that the occasions that led to the breakdown this month included:
1) A crash in markets this spring that led to a roughly 50% discount within the worth of collateral;
a. ~$60b collateral, ~$2b liabilities -> ~$30b collateral, ~$2b liabilities
2) Most of the credit score within the business drying up directly;
a. ~$25b collateral, ~$8b liabilities
3) A concentrated, hyper-correlated crash in November that led to a different roughly 50% discount within the worth of collateral over a really quick time frame, throughout which there was little or no market bid-side liquidity;
a. ~$17b collateral, ~8b liabilities
4) A run on the financial institution triggered by the identical assaults in November;
a. ~$9b collateral
5) As we frantically put all the things collectively, it turned clear that the place was bigger than its show on admin/customers, due to outdated fiat deposits earlier than FTX had financial institution accounts:
a. ~$9b collateral, ~$8b liabilities
I by no means supposed this to occur. I didn’t understand the total extent of the margin place, nor did I understand the magnitude of the danger posed by a hyper-correlated crash. The loans and secondary gross sales had been usually used to reinvest within the business—together with shopping for out Binance—and never for giant quantities of non-public consumption.
I deeply remorse my oversight failure. In retrospect, I want that we had carried out many many issues otherwise. To title just a few:
a) being considerably extra skeptical of huge margin positions
b) inspecting stress check eventualities involving hyper-correlated crashes and simultaneous runs on the financial institution
c) being extra cautious concerning the fiat processes on FTX
d) having a steady monitor of complete deliverable property, complete buyer positions, and different core danger metrics
e) Putting in additional controls round margin administration.
And none of this adjustments the truth that this all sucks for you guys, and it’s not your fault, and I’m actually sorry about that. I’m going to do what I can to make it as much as you guys—and to the purchasers—even when that takes the remainder of my life. But I’m anxious that even then I gained’t have the ability to.
I additionally need to acknowledge these of you who gave me what I now imagine to be the best recommendation about pathways ahead for FTX following the crash. You had been proper, in fact: I imagine {that a} month earlier FTX had been a thriving, worthwhile, progressive business. Which signifies that FTX nonetheless had worth, and that worth may have gone in direction of serving to to make everybody extra entire. We probably may have raised vital funding; potential curiosity in billions of {dollars} of funding got here in roughly eight minutes after I signed the Chapter 11 docs. Between these funds, the billions of {dollars} of collateral the corporate nonetheless held, and the curiosity we’d acquired from different events, I feel that we in all probability may have returned giant worth to clients and saved the business.
There would have needed to be adjustments, in fact: far more transparency, and far more controls in place, together with oversight of myself. But FTX was one thing actually particular, and also you all helped make it that. Nothing that occurred was your fault. We needed to make very exhausting calls in a short time. I’ve been in that place earlier than, and will have identified that when shitty issues occur to us, all of us are inclined to make irrational selections.
An excessive quantity of coordinated strain got here, out of desperation, to file for chapter for all of FTX—even entities that had been solvent—and regardless of different jurisdictions’ claims. I perceive that strain and empathize with it; lots of people had been thrust into difficult circumstances that usually weren’t their fault. I reluctantly gave in to that strain, despite the fact that I ought to have identified higher; I want I had listened to these of you who noticed and nonetheless see worth within the platform, which was and is my perception as effectively.
Maybe there nonetheless is an opportunity to save lots of the corporate. I imagine that there are billions of {dollars} of real curiosity from new buyers that might go to creating clients entire. But I can’t promise you that something will occur, as a result of it’s not my selection. In the meantime, I’m excited to see some constructive steps being taken, like LedgerX being turned again on.
I’m extremely grateful for all that you just guys have carried out for FTX through the years, and I’ll always remember that.
—SBF