Sam Bankman-Fried made a series of critical mistakes which led to the demise of the FTX exchange, according to a report by reuters.
The rapor noted that amid tightening monetary policies and broader crypto weakness, the FTX co-founder stepped in to rescue hit businesses.
Notably, sources to the media outlet reveal that deals involving Bankman-Fried’s trading firm Alameda Research led to significant losses.
A Catalog of Mistakes Proved Catastrophic
These included a $500 million loan deal with defunct cryptocurrency lender Voyager Digital before it requested bankruptcy protection. In a Sept. auction, the U.S. division of FTX paid $1.4 billion for its assets.
However, Reuters couldn’t determine the whole scope of Alameda’s losses.
It alleges that Bankman-Fried sent at least $4 billion in FTX money, secured by assets like FTT and shares in trading platform Robinhood Markets, to support Alameda, which had close to $15 billion in assets.
Sources claimed that some of this FTX money were customer deposits. With Bankman-Fried reportedly not informing other FTX executives about the move to prop up Alameda to avoid a leak.
Bankman-Fried: “I F**ked Up”
And now Bankman-Fried himself has broken his silence to admit he “f**ed up.” Taking to Twitter, the CEO said: “Anyway: right now, my #1 priority–by far–is doing right by users. And I’m going to do everything I can to do that. To take responsibility, and do what I can.
“Because at the end of the day, I was CEO, which means that *I* was responsible for making sure that things went well. *I*, ultimately, should have been on top of everything. I clearly failed in that. I’m sorry.”
Binance Pulls Plug on Deal
FTX now appears close to bankruptcy, with Binance also pulling out of a deal to rescue the firm. Bankman-Fried reportedly signed a non-binding letter of intent for the Binance takeover of FTX, excluding FTX US. But, in a tweet on Wednesday, Binance announced that it had scrapped the deal.
In the past, the two billionaire founders, Changpeng Zhao and Sam Bankman-Fried, have locked horns, with the latter accusing CZ of hurting FTX’s business.
Crypto influencer Cobie shared an alleged Slack conversation in a Twitter thread that hints that FTX’s top executive thinks Binance “never really planned to go through with the deal.”
Next Week to Prioritize Customers
Per the thread, FTX will prioritize customer funds over investors and employees by conducting a raise in the next week. This will evaluate the combined liquidity of FTX international and FTX US, as per the author, who appears to be Bankman-Fried.
Source: https://beincrypto.com/ftx-what-led-downfall-fourth-largest-crypto-exchange/