Describing the Bankruptcy Process of Bitcoin Exchange FTX, SBF Said There Is Still a Chance! Here Is That Letter

FTX declared bankruptcy after the liquidity crisis it experienced in the past weeks.

Before the bankruptcy decision, the world’s largest cryptocurrency exchange Binance and Tron (TRX) founder Justin Sun was interested in acquiring FTX, but there was no purchase agreement.

Expressing that he regretted filing for bankruptcy in the past days, the former CEO of FTX, SBF, wrote a new letter addressed to FTX employees.

While SBF explained why FTX failed in its letter, it apologized to the employees and said there was still a chance to save FTX.

Cryptocurrency Crash Dragged FTX To Bankruptcy!

In the spring of 2022, the collapse of FTX cryptocurrency Stating that it started with the collapse of the market, SBF said that with this collapse, it was also effective for its customers to withdraw their money in bulk.

“I never intended for the collapse and bankruptcy of FTX. I failed to realize the full size of the margin position and the magnitude of the risk posed by a hypercorrelated collapse.

Loans and secondary sales were often used to revive and reinvest in the stock market, including the Binance buyout, not for large volumes of personal consumption.”

Stating that before the spring crash in the markets, FTX had $ 60 billion in collateral and $2 billion in debt, SBF stated that the value of the collateral fell in half after the crash.

“Correction of credit in the post-crash industry has caused FTX’s collateral to drop to nearly $25 billion and its debt to jump to $8 billion.

In addition, the collapse that occurred in November caused the collateral to depreciate by 50% in a very short time, which was $17 billion in that month.

Putting everything else together, I also did not understand in time the full extent of the margin position and the magnitude of the risk posed by a hypercorrelated collapse.”

There’s a Lot of Pressure on Bankruptcy!

Considering filing for bankruptcy for FTX, SBF also reiterated its regret.

“I was in a helpless situation. Meanwhile, there was an overwhelming amount of coordinated pressure on FTX to file for bankruptcy.

We could actually raise substantial funds; The potential billion-dollar deal came about eight minutes after signing the bankruptcy papers.

We could save the job. There is still a chance. But I can’t promise you anything will happen, because it’s not my choice.”

SBF also did not address the allegations in the letter that FTX lent client funds to Alameda Research and that client funds were backed by illiquid tokens.

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