FTX chief apologises for ‘losing track’

Sam Bankman-Fried apologises to FTX staff over his regret at oversight failings in the lead up to the cryptocurrency exchange’s spectacular fall into bankruptcy.

FTX boss Sam Bankman-Fried apologises to staff over his regret at oversight failings in the lead up to the cryptocurrency exchange’s spectacular fall into bankruptcy. Picture: YouTube

The founder of FTX has apologised to former employees saying he “lost track of the most important things” amid his company’s rapid growth.

Sam Bankman-Fried, 30, wrote a letter to staff to express his regret at oversight failings in the lead up to the cryptocurrency exchange’s spectacular fall into bankruptcy this month.

He launched FTX in 2019 and it grew to be one of the world’s largest with more than a million users, a $US32bn ($A47.48bn) valuation and backing from blue-chip investors including Sequoia and BlackRock.

In a two-page letter yesterday (Wednesday), first obtained by Bloomberg, he wrote: “I didn’t mean for any of this to happen, and I would give anything to be able to go back and do things over again”.

He said that FTX was floored by a crash in crypto assets which halved its collateral to $US30bn in the spring, followed by a sudden drought in credit and a “run” which saw creditors scramble to withdraw their assets. He said he “froze up in the face of pressure” as his company collapsed, and calculated it had been left with $US9bn in collateral, against $US8bn in liabilities.

Bankman-Fried wrote: “I never intended this to happen. I did not realise the full extent of the margin position, nor did I realise the magnitude of the risk posed by a hyper-correlated crash. I deeply regret my oversight failure … I lost track of the most important things in the commotion of company growth.”

The lawyer overseeing FTX’s bankruptcy has told a court in Delaware that Bankman-Fried ran the company as “his own personal fiefdom” with “a lack of corporate controls at a level none of us in the profession had ever seen”.

The court heard that funds were transferred between different parts of his empire. Some were sent to Alameda Research, FTX’s sister hedge fund, to back other companies, while others were used for non-business expenses. One entity spent $US300m on properties including holiday homes in the Bahamas “used by senior executives”.

James Bromley, a partner at US law firm Sullivan & Cromwell acting for FTX’s new directors, said: “FTX was in the control of a small group of inexperienced and unsophisticated individuals and unfortunately the evidence seems to indicate that some or all of them were compromised individuals.”

Its collapse creates the risk of contagion. BlockFi, a crypto lender, has barred clients from taking out money after a $US400m loan from FTX this summer. Genesis Trading, a crypto lending platform, is reportedly on the brink of collapse, but has said it is trying to “resolve the situation consensually”.

Bankman-Fried signed off his letter: “You were my family. I’ve lost that, and our old home is an empty warehouse of monitors. When I turn around, there’s no one left to talk to.”

The Times