FTX Founder: ‘I Fucked Up’

Sam Bankman-Fried, the CEO of the embattled crypto exchange FTX, tweeted Thursday that he “fucked up twice” and that he is "sorry" that the world's second-largest crypto exchange has collapsed. 

Bankman-Fried has been looked at by many in Silicon Valley as a 30-year-old prodigy who, just over a month ago, investor Sequoia Capital theorized could be the world's first "trillionaire." Over the course of this week, FTX has very publicly and very fantastically begun to implode. Competitor Binance—the largest crypto exchange in the world—announced earlier this week that it would acquire FTX, then pulled out of the deal within 24 hours after doing due diligence. FTX's token has lost nearly all of its value in recent days.

In a Twitter thread, Bankman-Fried said that FTX has a liquidity problem, and that it didn't have enough cash on hand to cover users’ withdrawals. This is what everyone already knew, but Bankman-Fried attempted to bring some nuance to the situation and ultimately admitted he had no idea what was really going on at his own exchange. 

"The full story here is one I'm still fleshing out every detail of, but as a very high level, I fucked up twice," he tweeted. "The first time, a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users' margin. I thought it was way lower." 

Bankman-Fried basically chalked this catastrophic error up to a mistake, and said it was a learning experience, "which tells me a lot of things, both specifically and generally, that I was shit at." He went on to explain that this situation "sucks, and that's on me. I'm sorry." 

FTX, which has lost many of its executives in the last few days, is now looking for cash bailouts in the billions, which Bankman-Fried said will go "straight to users" to cover their investments.

Three days ago, Bankman-Fried tweeted that "a competitor is trying to go after us with false rumors," presumably referring to Binance. "FTX is fine. Assets are fine," he tweeted, before deleting it. 

Wednesday night, Sequoia Capital wrote down its investment in FTX to zero, noting in a letter to investors that "a liquidity crunch has created solvency risk for FTX. The full nature and extent of this risk is not known at this time. Based on our current understanding, we are making our investment down to $0." Bloomberg also wrote down the value of FTX and Bankman-Fried's sister hedge fund Alameda Research to $1 each, wiping out 95 percent of his net worth and taking him out of the billionaire rankings. 

Bankman-Fried tweeted that Alameda would be "winding down trading," an acknowledgement that the firm is also facing severe money problems. FTX.US, the exchange portal for U.S. investors—FTX was international only—is apparently still operating.

Bankman-Fried is a face of the "effective altruism" movement championed by many rich people in Silicon Valley, which basically posits that it is good for society for individual people to make as much money as possible in order to eventually donate that money. He has received many glowing profiles as a would-be do-gooder who only wears pants "in front of Congress" and donates a lot of his money.