Sam Bankman Fried, CEO at FTX, explained the current state of the crypto exchange platform and their efforts to make users whole. The trading venue collapses after facing a “liquidity crunch” and halting withdrawals.
Using his Twitter account, Bankman-Fried apologized to FTX users but left many with more questions than answers. The executive admitted that there had been miscommunication around recent events. The following statement is an attempt to calm the waters:
FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!). But that’s different from liquidity for delivery–as you can tell from the state of withdrawals. The liquidity varies widely, from very to very little.
SBF wrote a 700 word thread and managed to leave everyone even more confused about what actually happened
— Cobie (@cobie) November 10, 2022
Critical Changes In The FTX Infrastructure
The Bankman-Fried statement is unclear as users can’t withdraw their funds from the platform regardless of FTX holding a higher “market value of assets.” The executive acknowledged that there was a miscalculation on his part regarding liquidity and margin on the platform.
In addition, the trading venue faced a bank run that caused a $5 billion withdrawal over the past week. Despite recent events, Bankman-Fried claims he is still working for the benefit of his users:
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. So, right now, we’re spending the week doing everything we can to raise liquidity. I can’t make any promises about that. But I’m going to try. And give anything I have to if that will make it work.
The executive claims he is discussing with a “number of players” that might provide liquidity for the crypto exchange. However, the company allegedly needs over $6 billion to continue operations.
It is still being determined who or which company might risk capital on FTX, especially after the massive reputational and financial damage. There is speculation about TRON’s Justin Sun filling in a portion of the capital.
FTX will wind down its trading arm, Alameda Research, to resume operations. Bankman-Fried denied the rumors and speculation surrounding the trading desk.
However, many users believe Alameda should shut down to provide liquidity for the users. Across social media, people are pointing out the contradiction in Bankman-Fried’s speech.
Sam – it’s over. Shut down all trading and close the exchanges.
— Ryan Selkis
(@twobitidiot) November 10, 2022
Current events are leading politicians and regulators to target the crypto industry to “protect investors.” In the crypto community, some blame regulators for their ambiguity and uncertainty regarding the nascent industry that allowed FTX to run its shop.
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