FTX Reports $51 billion Crash in Collateral, Sequoia Apologises to Investors
Sam Bankman-Fried, founder of FTX, wrote to his staff Tuesday 22 November detailing a $51 Billion crash in the company’s collateral. This has fallen to $9 billion from $60 Billions.
Bloomberg obtained SBF’s letter. He stated that the collateral was only $9 billion before the company filed for Chapter 11 bankruptcy.
By then, the estimated liabilities had reached $8 billion. The collateral fell to $30 billion due to the FTX’s crypto assets. Sam Bankman-Fried, chief of FTX, wrote this message to employees:
“I didn’t intend for this to happen. I would give anything just to be able do it over again. I didn’t realize the full extent and risk of the margin position nor the severity of a hyper-correlated crash.
The bankruptcy proceedings have shown some of the chaotic organizational practices at FTX that are rooted in deep-rooted problems. The bankruptcy proceedings reveal poor financial controls and documentation. It also shows that payment requests were approved using emojis in chatrooms.
The company also used its funds for personal items and homes for employees and advisors. According to some reports, SBF’s parents purchased properties in the Bahamas worth a staggering $300,000,000 from senior staff of FTX. Rumours also suggest that Sam Bankman Fried was behind the $600million hack of FTX’s crypto exchange FTX.
Sequoia Apologizes To Investors For FTX
We know Sequoia Capital, a venture capital firm, was one of the largest investors in FTX. Nevertheless, top VC firm partners apologized to investors on Tuesday, November 22, as the crisis continues.
Roelof Botha was the firm’s global head and said that he and his coworkers regret backing the company. Sequoia Capital had invested $214 million in FTX.com, FTX.us and both funds.
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