FTX CEO Sam Bankman-Fried promised to use “every penny” his crypto exchange has to repay users ahead of investors, apologizing for his “f**k up” in a tweet thread Thursday.
The 30-year-old former billionaire took to Twitter to say Alameda Research – his empire’s once mighty crypto quant shop and market maker – would go dark “one way or another.” Of FTX, his upstart derivatives exchange that became the crypto industry’s darling, he said it will “embrace radical transparency” – if it continues operating at all.
Bankman-Fried also shut down rumors that Alameda was attempting to short – and possibly destabilize – tether, the largest stablecoin by market capitalization. On Thursday morning, the price of tether traded down to 97 cents and to even as low as 93 cents on the crypto exchange Kraken.
He also promised the users of FTX.US that their funds were "fine," echoing a claim he made about FTX immediately before revealing that the exchange was not, in fact, fine.
Alameda came under scrutiny last week after CoinDesk published a balance sheet suggesting it had heavy holdings of the FTT token – an exchange token issued by FTX, Alameda’s sister company also founded by Bankman-Fried.
Although the CEO assured customers that his company was fine, repeatedly saying on Twitter that he had no solvency issues, on Tuesday he revealed that he was facing liquidity concerns and had come to an agreement with crypto exchange Binance to acquire FTX. That deal fell apart a day later.
On Thursday, Bankman-Fried suggested FTX might still survive, saying, “There are a number of players who we are in talks with, LOIs (letters of intent), term sheets, etc.”
“We'll see how that ends up,” he added.
‘I was off’
In his thread, Bankman-Fried tried to explain his company’s situation, saying FTX “poorly” labeled bank-related accounts internally, and so he misjudged users’ margins. Customers withdrew $5 billion worth of assets on Sunday, but had the liquidity to support only 80% of that, with leverage 1.7 times what FTX had.
“FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!),” he said in another tweet.
The revelations come as regulators ramp up scrutiny of the trading company. U.S. investigations include the Department of Justice and Securities and Exchange Commission, while Japan’s Financial Services Agency ordered the local FTX branch to suspend operations immediately.
In his thread Thursday, Bankman-Fried didn't address reports that FTX was using customer funds to prop up Alameda.
“What matters right now is trying to do right by customers. That’s it,” he tweeted about customers.
Tracy Wang contributed reporting.
UPDATE (Nov. 10, 2022, 15:00 UTC): Adds additional information and context throughout.
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