The CEO of FTX Sam Bankman-Fried in a recent interview has attributed the collapse of his company to costly mistakes he made while debunking rumors that he committed fraud.
“We completely failed on risk. That feels pretty embarrassing, in retrospect”, he said.
Bankman-fried disclosed that he was excited about the prospects of FTX which he saw as a thriving business, stating that the recent upheaval at the company got him perplexed.
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Also, he was accused of secretly transferring $10 billion client’s money to Alameda research, which led to a liquidity crunch at FTX.
He however refuted such claims, stating that he did not transfer the said amount to the research firm while noting that he did not run the firm.
According to the Ex Billionaire, he stated that the time he knew there was a big problem when the whole saga began, was on November 6, after Alameda’s sizable FTT position was exposed by Coindesk.
He said, “When we looked at that, there was a potential serious problem. Alameda had taken a huge hit by that point. We were seeing a run on the bank start.
“I was nervous [when] the Alameda balance sheet” was exposed by Coindesk, but I expected that the damage was going to be limited to Alameda, not an “existential” crisis for FTX.”
Following the widespread accusations of him using investors’ money to party, he repudiated such claims of wild partying and off-label drug use, saying that FTX functions consisted of only board games or dinner parties.
On November 11, Bankman-Fried resigned as the CEO of FTX after the firm filed for bankruptcy protection while facing a liquidity crunch, which was followed by a deluge of withdrawals from customers.
Rival cryptocurrency platform Binance had originally agreed to rescue FTX from its financial woes but later back-tracked on the non-binding deal.
Binance disclosed that its reason for back-tracking on its initial statement was as a result of the alleged investigations that FTX was facing amongst other reasons
It said in a statement, “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX”
FTX’s newly appointed CEO, John J. Ray III, in recent filings, disclosed that FTX faced a complete failure of corporate controls. He further stated that he had never seen a company in such poor shape in his 40 years of handling bankruptcies.
The collapse of FTX threw several companies into chaos, as 130 companies affiliated with the company filed for bankruptcy protection.
Crypto exchange platform BlockFi was not left out, as it filed for bankruptcy in the US, as the collapse of FTX continues to reverberate across the industry.
The company had already halted most activity on its platform, citing “significant exposure” to FTX. BlockFi said it was seeking court protection to restructure, settle its debts and recover money for investors.
The firm had earlier this year received a rescue deal from FTX as the values of cryptocurrencies plunged.
FTX collapse has also negatively impacted the crypto industry, as Bitcoin which has a market cap dominance of around 40% plunged to an all-time low, pulling down the entire crypto market with it.
The overall crypto market cap fell from over $1 trillion at the end of October to now close to $800 billion only.
This crash has made the entire ecosystem and its market participants extremely nervous, which has led to the massive withdrawal of assets.