Former FTX CEO Sam Bankman-Fried explained in a letter to its employees the reasons for the collapse and did not rule out the possibility of restoring the platform’s activities.
According to Bankman-Fried, FTX’s troubles started with a market crash in the spring, followed by deleveraging and massive client withdrawals. The poor quality of margin management and risk control led to bankruptcy filing.
He wrote:
“I had no idea that it was possible. I did not fully understand the nature of the margin position and the risk taken associated with a highly correlated crash. Loans and secondary sales were generally used to reinvest in the business, including buying back stakes from Binance, and not to finance personal needs on a large scale.”
