SBF Blames ‘Oversight Failure’ in Apology to FTX ‘Family’

FTX founder Sam Bankman-Fried says his own lack of oversight helped lead to the demise of the company.

In an apology to his former employees published late Tuesday (Nov. 22), Bankman-Fried (or SBF, as he’s often called) said outsized borrowing by sister firm Alameda Research led to the FTX crash earlier month, although his own “oversight failure” is to blame.

“You were my family,” he wrote. “I’ve lost that, and our old home is an empty warehouse of monitors. When I turn around, there’s no one left to talk to.”

The letter followed the first day of FTX’s federal bankruptcy hearing, in which James Bromley, representing the company’s new management, described the firm as being “run as a personal fiefdom of Sam Bankman-Fried.”

FTX owes its 50 largest creditors a shocking $3.1 billion, with the top 10 each due more than $100 million, as PYMNTS reported.

Bromley told the court Tuesday that a “substantial amount” of FTX Group’s assets “have either been stolen or are missing.”

It is not clear whether these “substantial amounts” include the several billion in combined loans that Alameda Research reportedly made to SBF, two of his subordinates, and a company majority-owned by him, or whether the funds owed are separate from them.

In October 2021, SBF also raised $420 million from investors on behalf of FTX — but ended up paying himself $300 million of that amount, claiming it as a personal reimbursement for re-purchasing the 15% stake in the exchange held by rival crypto firm Binance.

John J. Ray, who took over as CEO of FTX following the bankruptcy filing, has called the situation at FTX the worst he’s seen in 40 years of restructuring work.

Speaking to PYMNTS earlier this week, however, Cornell University law professor Saule T. Omarova discussed where the crypto industry and regulators can go from here.

While she wasn’t advocating for the outright ban on cryptocurrencies, Omarova, who specializes in financial regulation, suggested that perhaps the general public could rethink the idea that cryptocurrencies are the future of payments.

“As soon as you create that illusion that some private issue token is just as safe as the U.S. dollar issued by the Federal Reserve, you immediately put the Federal Reserve on the hook, and the entire federal government on the hook to back it up, should then the entire system come collapsing,” Omarova said.