FTX collapse: Bankman-Fried regrets filing for bankruptcy

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Sam Bankman-Fried will not remain silent, despite lawsuits from aggrieved customers and investigations from regulators.

The founder of cryptocurrency exchange FTX is determined to deliver his version of his downfall at all costs. After publicly apologizing a few days ago, he has just delivered his mea culpa to his former employees.

The most startling statement in that apology letter, dated Nov. 22, is when the former trader says he regrets filing for Chapter 11 bankruptcy for his empire, comprised of FTX and Alameda Research. a hedge fund also functioning as a trading platform.

He claims to have been under strong pressure to file for bankruptcy and to have yielded to it, but does not specify where these pressures come from.

“Extreme coordinated pressure has come, out of desperation, to file for bankruptcy from all of FTX — even solvent entities — and despite claims from other jurisdictions,” Bankman-Fried wrote in his letter, reviewed by TheStreet. “I understand that pressure and I understand that; a lot of people have been thrust into difficult circumstances that were usually not their fault.”

“I reluctantly gave in to this pressure, even though I should have known better; I would have liked to listen to those of you who have seen and still see the value of the platform, which was and is also my belief.”

Bankman-Fried does not specify who exerted this pressure on him and in what form.

You can read the FTX collapse timeline here.

“There is still a chance”

Bankman-Fried claimed that FTX could have avoided filing for bankruptcy. He says investors were interested in bailing out the group, which needed to plug an $8 billion hole to satisfy the demands of its panicked customers who were withdrawing their money.

“We probably could have raised some significant funds; the potential interest in billions of dollars in funding came about eight minutes after I signed the Chapter 11 documents,” the former crypto ’emperor’ says. .

“Between those funds, the billions of dollars in collateral the business still held, and the interest we had received from other parties, I think we probably could have returned great value to customers and saved the business.”

It doesn’t stop there. He still believes it’s not too late.

“Perhaps there is still a chance to save the company,” Bankman-Fried wrote. “I believe there are billions of dollars of real interest from new investors that could be used to make customers whole. But I can’t promise you that anything will happen, because it’s not is not my choice.”

What Bankman-Fried fails to say, however, is that even if FTX had been bailed out, the group had already lost the trust of its customers and investors. There was a general feeling of suspicion which caused a run on the bank. In the financial sector, mistrust and loss of trust are two things that very few institutions can survive.

Court documents product this week by Alvarez & Marsal North America, one of the advisors hired to help restructure Sam Bankman-Fried’s crypto empire, showed that the cryptocurrency exchange and a number of its affiliates have 1, $24 billion in cash on the balance sheet when the company filed for bankruptcy.

Alameda Research had nearly $401 million on its balance sheet, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

FTX owes major creditors $3 billion

FTX recently revealed that its top 50 creditors are seeking $3 billion in claims. The insolvent company published the amount of claims of each of its main creditors, but did not name them or disclose any information about their registered office.

In its letter to its former employees, Bankman-Fried does not respond to a scathing criticism new FTX CEO John Ray and attorney James Bromley, co-head of the restructuring practice at law firm Sullivan & Cromwell.

“Never in my career have I seen such a complete failure of corporate controls and such a complete lack of reliable financial reporting as has happened here,” Ray wrote in a 30-page document filed with the United States Bankruptcy Court for the District of Delaware. “From the compromised integrity of systems and faulty regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented. “

Bromley drove the point home: “We’ve probably seen one of the sharpest and most difficult corporate collapses in American corporate history,” Bromley told a Delaware bankruptcy court during a hearing on November 22.

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