Sam Bankman-Fried tweets he’ll explain “what happened” with FTX collapse

Former FTX CEO Sam Bankman-Fried hinted in a string of cryptic tweets that he plans to provide an explanation of “what happened” with the crypto exchange company’s sudden collapse.

Bankman-Fried issued a series of tweets on Sunday through Tuesday spelling out “What h-a-p-p-e-n-e-d,” with the word “happened” spelled via separate tweets for each character across a 24-hour period. 

The 30-year-old MIT grad, whom Fortune magazine flagged as the potential “next Warren Buffett,” then added in a following tweet, “I’ll get to what happened. But for now, let’s talk about where we are today.”

Bankman-Fried founded FTX in 2019, just as cryptocurrencies were starting to gain in popularity. But his reputation — and wealth — vanished with FTX’s bankruptcy filing last week, prompting questions about the company’s management and structure. A bankruptcy document filed on Tuesday said the company could have more than 1 million creditors. 

The posts generated thousands of likes and retweets by Tuesday morning. Regarding his recall of events Bankman-Fried also cautioned “my memory might be faulty in parts.”

In a Tuesday afternoon tweet, Bankman-Fried said the company’s trading arm, called Alameda Research, “had more assets than liabilities” after November 7, and that “FTX US had enough to repay all customers.” He added, “Not everyone necessarily agrees with this.”

Some Twitter users provided their own explanations for what they believed had happened. 

“Fraud, is what seemed to have happened sir,” one Twitter user responded.

Contact from regulators

On Tuesday, FTX began the first steps in a bankruptcy restructuring process in Delaware. Court documents filed by FTX attorneys show a glimpse of what has happened at the company since its bankruptcy filing on Friday, including contact from regulators such as “the U.S. Attorney’s Office, the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission and dozens of federal, state and international regulatory agencies.”

Regulators are trying to determine if employees at Alameda Research used customer funds to make risky trades. Using customer accounts to make trades and without their consent, and mixing client funds with other parties’ assets are illegal under U.S. securities law for traditional securities. 

“There is substantial interest in these events among regulatory authorities around the world,” according to the FTX court filing.

FTX’s fall from the second largest crypto exchanges to bankruptcy is “unprecedented,” the court documents said. The company was once the darling of the crypto market, garnering almost $2 billion in venture capital in less than three years.

“Barely more than a week ago, FTX, led by its co-founder Sam Bankman-Fried, was regarded as one of the most respected and innovative companies in the crypto industry,” according to the court filing. 

Freeze on customer withdrawals

Bankman-Fried stepped down from FTX on November 11, and was replaced by John Ray III, who froze customer withdrawals on the platform and moved remaining assets into a “cold wallet custodian,” court documents read. “Cold” wallets are standalone pieces of hardware, similar to a USB drive, for storing crypto currency offline

Bitcoin, ether, solana and other crypto currencies tumbled after the FTX bankruptcy.

Problems facing FTX came to light last week when Bankman-Fried told a group of investors the company needed about $8 billion to back up its users’ crypto assets. The company experienced crypto’s version of a bank run earlier this month when users withdrew about $5 billion in a single day amid rising concerns over FTX’s solvency. 

The FTX bankruptcy has reignited calls in Washington for government oversight of the unregulated cryptocurrency market. U.S. Treasury Secretary Janet Yellen told CBS News that FTX should serve as a warning to Americans about investing their money in “extremely risky” financial products.

Experts told CBS MoneyWatch this week that it could be years before FTX customers get refunds on their accounts. Court documents don’t mention how much money FTX users should be reimbursed. At least $1 billion in customer funds are unaccounted for, according to Reuters.

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