I made a lot of mistakes, the former head of the FTX cryptocurrency exchange poured ashes on my head

“I screwed up,” he summed up his time at the helm of Bankman-Fried. “I’ve made a lot of mistakes,” she added, according to Bloomberg. He also noted that more attention should have been paid to risk management, client protection and the ties between FTX and subsidiary Alameda. “I’d give anything to be able to do some things again and differently. I’ve never tried to cheat anyone,” she said. She also denied knowing the full extent of Alameda’s position at FTX. He claims he was taken aback.

FTX’s liquidity drop occurred after Bankman-Fried secretly transferred $10 billion (CZK 233.1 billion) of FTX client funds to Alameda, Reuters reported, citing two well-known sources. According to them, at least $1 billion has disappeared from client funds.

The company filed for bankruptcy on November 11. Affected customers withdrew six billion dollars from the platform within three days, and rival cryptocurrency exchange Binance dropped its proposal that exchange FTX would fix the issues.

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Bad management

Restructuring expert John Ray, who bought out the bankrupt firm, described FTX as a poorly managed, largely uncertified firm lacking basic accounting practices. He called it the worst example of corporate control failure he had ever seen. At the same time, FTX was still the third largest cryptocurrency exchange in the world in terms of trading volume last year.

The public appearance of Bankman-Fried, sometimes referred to by the media as SBF, caused controversy. Questions remain about how the Bahamas-based FTX ended up with an eight billion dollar shortfall on its balance sheet and whether it mishandled client funds. Those concerns were compounded by reports that FTX was lending money to Alameda clients for risky trades.

The former FTX head also said he “did not knowingly mix funds” from the firm and clients. FTX and Alameda were much more connected than he thought, he said. He also said he didn’t pay attention to Alameda’s risky investments. He didn’t explain where the customers’ money went.

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Bankman-Fried said he gave the interview against the advice of his legal representatives. He faces many lawsuits and investigations by regulators. Some observers speculate that his public comments could be used against him in a lawsuit.

The former head of FTX also commented on the company’s culture. According to him, there were no wild parties at the company and he did not notice any use of illegal drugs. He added that he was later prescribed some medication for concentration problems.

FTX once boasted a valuation of around $32 billion (CZK 746 billion). It now owes a total of $3.1 billion to its fifty largest unsecured creditors, but there may be more than a million creditors worldwide. The former FTX head’s fortune at one point reached $26 billion. In an interview, Bankman-Fried said he was left with only one credit card and $100,000 in the bank.

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The fall of cryptocurrencies

Virtually the entire cryptocurrency world paid for the fall of FTX, an example being the significant sale of Bitcoin, which was followed by other virtual coins. Even before the fall of FTX, the most popular cryptocurrency in the world, it was trading for CZK 522,150, but subsequently the value fell below CZK 400,000, which was the worst result since the end of 2020.

For example, on Monday this week the exchange rate was only 376,440 CZK, on ​​Wednesday morning it was already 400,410 CZK, and on Thursday afternoon it was 399,240 CZK. Recall that exactly one year ago the rate was significantly higher. A virtual currency was exchanged for 1,288,230 CZK. The all-time record so far was set by the world’s most popular cryptocurrency in November 2021 when it was bid for CZK 1,427,350.

Bitcoin and other virtual currencies

There are many virtual currencies. One of the oldest and currently most popular is the so-called bitcoins. They were created as early as 2009, but have enjoyed increased popularity in recent years. This currency was created so that it cannot be influenced by any government or central bank.

Cybercoins are “minted” by a network of computers with specialized software programmed to release new coins at a steady but ever decreasing rate. The number of coins in circulation should eventually reach 21 million, which should happen around 2140.

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