FTX chief executive Sam Bankman-Fried apologises to staff, investors on Twitter after cryptocurrency exchange's sudden collapse
The chief executive of cryptocurrency exchange FTX has taken to social media to say he was at fault after revealing the company's swift and sudden downfall.
Its collapse has sent shock waves through the crypto world, with FTX head Sam Bankman-Fried now seeking some funds from other funds, including current investors in FTX such as venture capital fund Sequoia Capital, according to Reuters sources.
Those sources said Mr Bankman-Fried has discussed raising the funds from crypto token Tron founder Justin Sun, rival exchange OKX and stablecoin platform Tether.
However, it was not clear whether he would be able to raise the funds he needed and whether those investors would participate.
Tether's chief technology officer, Paolo Ardoino, tweeted that it had "no plans to invest in or lend assets to FTX".
Authorities are now investigating FTX for potential securities violations and analysts are bracing for a further downturn in crypto prices after its collapse.
Mr Bankman-Fried said in tweets and a memo to employees seen by Reuters that he was in talks with "a number of players" in the crypto sector, including Mr Sun, after a potential rescue deal with larger rival Binance fell apart.
However, he added, he did not want to "imply anything about the odds of success".
He also said his trading firm, Alameda Research — which sources have said was partly behind FTX's problems — was winding down trading.
It followed repeated apologies by Mr Bankman-Fried on social media to clients and employees.
"I am sorry. That's the biggest thing," he said in a series of tweets on Thursday morning local time.
"I f****d up, and should have done better.
"I also should have been communicating more very recently.
"The full story here is one I'm still fleshing out every detail of, but as a very high level, I f****d up twice.
"The first time, a poor internal labelling of bank-related accounts meant that I was substantially off on my sense of users' margin. I thought it was way lower."
Mr Bankman-Fried — who is from California but now lives in the Bahamas where FTX is based — said the company would take a "hard look" at governance and that he "will not be around if I'm not wanted".
FTX had agreed earlier this week to sell itself to its arch-rival Binance after experiencing the cryptocurrency equivalent of a bank run.
Customers fled the exchange after becoming concerned about whether FTX had sufficient capital.
A person familiar with matter said that the Department of Justice and the Securities and Exchange Commission were examining FTX to determine whether any criminal activity or securities offences were committed.
The person could not discuss details of the investigations publicly and spoke to The Associated Press on condition of anonymity.
Mr Bankman-Fried had been hailed as a kind of saviour earlier this year when he helped shore up a number of cryptocurrency companies that ran into financial trouble.
The investigation into FTX by those in the crypto world, as well as securities regulators, will centre on the possibility that the firm may have used customers' deposits to fund bets at Mr Bankman-Fried's hedge fund, Alameda Research.
In traditional markets, brokers are expected to separate client funds from other company assets. Violations can be punished by regulators.
The latest crisis in the crypto industry prompted renewed calls for stricter regulations.
White House press secretary Karine Jean-Pierre said the FTX developments highlighted "why prudent regulation of cryptocurrencies" was needed.
"The White House, along with the relevant agencies, will again closely monitor the situation as it develops," she said.
Analysts said the collapse of the cryptocurrency's third largest exchange was likely to cause further disruption across the entire crypto world.
"The unwinding of FTX, as well as its shock of confidence to the system, will cause crypto prices to fall even further, leading to a new cascade of margin calls," said analysts at JP Morgan in a note to investors.
"This de-leveraging is likely to last for at least a few weeks unless a rescue for Alameda Research and FTX is agreed quickly."
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