FTX’s Collateral Tanked to $9 Billion From $60 Billion, SBF Told Staff
- FTX founder SBF sent company staff a memo on Tuesday to explain the exchange’s collapse, per reports.
- FTX had $60 billion in collateral this spring, but its value fell to $9 billion by November. That’s against liabilities of $8 billion.
- He apologized to staff and was regretful about what happened.
FTX founder Sam Bankman-Fried sent a memo to company staff on Tuesday and gave his account of what happened in the lead-up to the crypto exchange’s stunning collapse, according to reports.
Bankman-Fried said in a letter FTX had around $60 billion in collateral and $2 billion in liabilities this spring — but a market crash at the time halved the value of the collateral, according to a copy of the document obtained and reposted by Bloomberg.
A further “drying up” of credit in the industry further tanked the value of the collateral to around $25 billion, while FTX’s liabilities quadrupled to $8 billion.
In November, another “concentrated, hyper-correlated” crash led the collateral’s value to crash to $17 billion, according to the message. A “run on the bank” then decimated its value to $9 billion, he said. Bankman-Fried did not provide details of what made up the collateral and liabilities.
FTX filed for bankruptcy on November 11 and Bankman-Fried resigned as CEO on the same day. His message to staff on Tuesday was shared by a current FTX employee on the company Slack channel, as the former CEO can no longer access the messaging platform, Coindesk reported.
Bankman-Fried apologized to FTX staff in the email, saying he was “deeply sorry” and regretful about what happened.
“I didn’t mean for any of this to happen, and I would give anything to be able to go back and to do things over again,” Bloomberg reported, citing the letter.
Bankman-Fried did not address issues raised by current CEO John J. Ray such as security failures at the exchange, and allegations he transferred customer funds from FTX to his crypto trading firm Alameda Research, as reported by Reuters on November 11.
The US Securities and Exchange Commission and the Department of Justice have opened investigations into the collapse of FTX. Bankman-Fried was also reportedly interviewed by the Bahamian police on November 12.
FTX’s lawyers said at its first bankruptcy hearing on Tuesday that it could have millions of creditors.
FTX did not immediately respond to Insider’s request for comment which was sent outside regular business hours.