FTX founder Sam Bankman-Fried on Thursday said the millions of customers who lost money from the collapse of his cryptocurrency exchange could get their money back.
Bankman-Fried said in a Substack post that three factors combined to cause the “implosion” of FTX — the balance sheet of his hedge fund, Alameda Research, growing to $100 billion of net asset value, $8 billion of net borrowing and $7 billion of liquidity on hand; Alameda not successfully limiting its market exposure; and an “extreme, quick, targeted” crash caused by the head of another cryptocurrency exchange, Binance.
Bankman-Fried was arrested in the Bahamas last month and is facing a variety of charges including wire fraud and securities fraud. The controversy surrounding him and FTX arose after the exchange filed for bankruptcy in November due to being unable to provide billions of dollars for customers’ withdrawal requests.
He was extradited from the Bahamas to stand trial in Manhattan and has pleaded not guilty to all charges.
Prosecutors have said that Bankman-Fried misused the money that his customers invested into FTX to buy real estate, make political donations and invest in Alameda.
Bankman-Fried said in his post that Alameda’s “contagion” spread to FTX, but “substantial recovery” remains possible, and FTX US should be able return all of its customers’ money. He said FTX International has billions of dollars in assets, and he is using almost all of his personal assets to help customers.
“I didn’t steal funds, and I certainly didn’t stash billions away,” he said. “Nearly all of my assets were and still are utilizable to backstop FTX customers.”
He said Alameda lost about 80 percent of the value of its assets during 2022 as a result of a series of market crashes, and FTX was impacted.
Bankman-Fried said FTX International processed almost $5 billion worth of withdrawals during its last few days operating and still retained about $8 billion of assets of varying liquidity when it declared bankruptcy and new CEO John Ray took over as its leader.
He said FTX has multiple potential funding offers, and he believes FTX could have raised enough financing to return money to customers if it was given a few more weeks.