Cryptocurrency golden boy Sam Bankman-Fried begged investors for $4 billion to bail out FTX, admitting, “I screwed up.”
The embattled tech mogul, whose $16 billion fortune has been gutted by the crisis at crypto exchange FTX.com, made the statement on Wednesday, hours before rival Binance pulled out of a takeover deal.
Bankman-Fried, 30, said on the call with investors that FTX.com needed $4 billion to stay solvent, a source told Bloomberg.
He told them he “screwed it up” and that he would be “unbelievably, unbelievably grateful” for a ransom.
The crisis at FTX is linked to a ‘liquidity crisis’ after users withdrew $6 billion in 72 hours as of Tuesday morning.
Sam Bankman-Fried pleaded with investors to pump $4 billion into FTX after a “liquidity crisis” hit the company’s finances and saw its net worth collapse by 94 percent.
He also tweeted “I screwed up” and “should have done better” amid the current crisis at FTX.com.
The crisis has sent crypto markets into a free fall, with Bitcoin falling 17 percent on the turmoil.
The firm hoped to avoid collapse after a surprising proposal from Binance to take over the company, but Binance pulled out after it reportedly found a “black hole” in FTX’s books.
Big names like Tom Brady and his ex-wife, Gisele Bundchen, are reportedly facing losses after they took an equity stake in the company last year.
Sports stars Steph Curry and Naomi Osaka are also among those who had investments in the company.
FTX is now facing bankruptcy and one of its early backers, Sequoia, has essentially declared the company worthless after it downgraded its own investment to $0.
In the Wednesday call, Bankman-Fried reportedly insisted that Binance would not back out of the takeover, but the deal collapsed just an hour later.
Binance billionaire boss Changpeng ‘CZ’ Zhao said in a statement: “Our hope was to help FTX customers provide liquidity, but the issues are beyond our control or ability to help.”
Tom Brady and now his ex-wife Gisele Bundchen reached an equity deal with FTX last year but could lose their investment. The market value of the exchange plunged by 70 percent this week
Steph Curry partnered with FTX in September 2021, though details were not revealed.
Naomi Osaka acquired an equity stake in the popular cryptocurrency exchange in March this year.
Bankman-Fried issued another humiliating apology Thursday, this time to customers.
In a lengthy Twitter thread, he said: ‘Sorry. That’s the biggest. I screwed up, and I should have done better.
‘I should have been communicating more recently as well.
‘Clearly, my hands were tied for the duration of the potential Binance deal; In particular, I was not allowed to say much in public. But of course it’s my fault that we ended up there in the first place.
He goes on to say that he “screwed up twice” and that his mistakes “tell me a lot of things, both specific and general, that I screwed up.”
Bankman-Fried said ‘this is all about international FTX’ and ‘US FTX users are fine’, but the statement drew skepticism from some customers who say they have been unable to withdraw.
It revealed that around $5 billion in withdrawals were requested on Sunday alone, but the company only had around 80% of that in liquidity.
Binance was ready to buy FTX, but withdrew due to “issues…beyond our control or ability to help”
The crisis in FTX has shaken the crypto markets and caused coins like Ethereum and Bitcoin to lose value. The charts show they suffered rapid drops as details of the FTX issues emerged.
He also said that the priority now is “doing the right thing for users” and that the company is trying to increase liquidity.
US financial regulators launched an investigation into FTX over concerns about its handling of customer funds.
The crisis has caused cryptocurrency values to plummet.
Bitcoin, the largest cryptocurrency, fell 17 percent on Wednesday to a two-year low of $15,969.04 and was around $17,700 at noon ET Thursday, down 16.5 percent from five days ago.
The debacle at FTX marks a momentous downfall for Bankman-Fried, who said last year that his cryptocurrency company would grow big enough to buy Goldman Sachs, which is currently valued at nearly $130 billion.
Banker Fried, 30, was worth an estimated $16 billion before the crisis, but his fortune has shrunk by 94%.
FTX enjoyed the backing of big-name celebrities before a ‘liquidity crunch’ caused its downfall
The CEO lost 94 percent of his fortune on Tuesday, the biggest one-day crash among billionaires.
His 53% stake in FTX was previously worth $6.2 billion and another $7.4 billion of his fortune came from Alameda Research, his cryptocurrency trading company.
The Wall Street Journal reported Thursday that FTX lent billions of dollars in client assets to Alameda to fund risky trades.
A source told the WSJ that Bankman-Friend has informed investors that Alameda owes FTX about $10 billion.
Pundits called the FTX crash another “red flag” for the ailing cryptocurrency market and said investors should be cautious for a while.
“This is another black eye for the industry,” said David Holt, cryptocurrency industry expert at CFRA.
Adding to its regulatory concerns, most of FTX’s legal and compliance staff resigned late Tuesday, according to a report by news outlet Semafor citing people familiar with the matter.