FTX boss apologizes for crypto exchange collapse

FTX Digital Markets (FDM) chief Sam Bankman-Fried took to Twitter yesterday to apologize for his mishandling of his multibillion-dollar cryptocurrency exchange and related digital asset businesses.

“Right now, my #1 priority – by far –  is doing right by users. And I’m going to do everything I can to do that. To take responsibility and do what I can.”

He added that he will do everything he can to raise $8 billion to plug the liquidity hole in his company.

“I can’t make any promises about that. But I’m going to try. And give anything I have to, if that will make it work,” he said. 

Hubert Edwards, principal of Next Level Solutions Limited, told Guardian Business yesterday that the cryptocurrency regulatory sector in general might have right now have a “lighter touch regulatory regime” and therefore the mechanisms for discovering the kinds of things that led to FTX’s collapse might not yet be in play, especially given the nature of the crypto industry globally.

He explained that the Securities Commission of the Bahamas likely did not fail to execute any of its obligations, but contended that the regulatory regime for this sector is trying to keep up with the nuances of the technology and its capabilities and loopholes.

The SCB announced yesterday in a statement that it froze the assets of FTX Digital Markets and appointed a provisional liquidator for the company.

Edwards spoke to this paper following the release of the SCB statement that outlined the fate of Bahamas-headquartered FTX, and explained that the SCB should not be cast in a negative light in regards to the failure of one of the world’s largest cryptocurrency exchanges.

He said the quickly shifting cryptocurrency sector and the sheer size of the company, once valued at more than $30 billion, were more than enough to test a young and transforming Digital Assets and Registered Exchanges Act, and a regulator still making sense of an ever-changing industry.

Edwards said The Bahamas should not downplay the downfall of FTX, but own the situation and move forward with the lessons learned.

“It is what it is, it’s large, it’s significant, it’s huge,” he said.

“But we also must not cast the regulators in a light which really there weren’t positioned to deal with.

“We understand the crypto business might have had a lighter touch regulatory regime. We can now go back and ask ourselves, should it have been a lighter touch?

“But here are some juggernauts who are coming from an environment of totally no regulation, and its evolving. So over time I believe that if we evolve and learn, there are some positives that can come from this.”

Edwards said the FTX debacle is the first challenge the country is facing on its path to becoming a digital assets leader. According to him, how the country emerges from this problem will be a testament to how it can function in this space.

“When we think about regulation for a crypto business it’s different, it’s not like a bank, it’s not like a mutual fund or an insurance company,” said Edwards.

“We have to be honest and accept that that there are some things that may not be as tightly managed and regulated as, in hindsight, as we would want them to be.

“That said, the horse has bolted, but we have an opportunity to learn a lot.

The US Securities and Exchange Commission is looking into the inner workings of FTX, after it was announced on Tuesday that Bankman-Fried called Binance Chief Executive Officer Changpeng Zhao for a bailout, after there was a run on FTX’s token FTT that left the cryptocurrency exchange in a liquidity crisis. Binance, the world’s largest cryptocurrency exchange, revealed on Wednesday via Twitter that it will not make good on its conditional intent to bail out FTX.

Edwards said the position the SCB took on FTX, to freeze its assets and appoint a provisional liquidator, is a strong one.

“The fact that the regulators have stepped in and made such an important statement to the market, I think that will give some level of comfort… not total comfort, but some level of comfort that the matter is under careful consideration,” said Edwards.

Clarification: An earlier version of this story explained that Hubert Edwards, principal of Next Level Solutions Limited, told Guardian Business yesterday that the Securities Commission of The Bahamas (SCB) may have given the cryptocurrency sector a “lighter touch regulatory regime” that did not quickly expose the internal failings of FTX Digital Markets.

However, Edwards explained that globally regimes for regulating crypto have exacted a lighter touch due to the nascent stage of cryptocurrency and digital assets in general, and was not suggesting that the Securities Commission failed to properly regulate FTX Digital Markets.

 FTX Digital Markets (FDM) chief Sam Bankman-Fried took to Twitter yesterday to apologize for his mishandling of his multibillion-dollar cryptocurrency exchange and related digital asset businesses.

“Right now, my #1 priority – by far –  is doing right by users. And I’m going to do everything I can to do that. To take responsibility and do what I can.”

He added that he will do everything he can to raise $8 billion to plug the liquidity hole in his company.

“I can’t make any promises about that. But I’m going to try. And give anything I have to, if that will make it work,” he said. 

Hubert Edwards, principal of Next Level Solutions Limited, told Guardian Business yesterday that the cryptocurrency regulatory sector in general might have right now have a “lighter touch regulatory regime” and therefore the mechanisms for discovering the kinds of things that led to FTX’s collapse might not yet be in play, especially given the nature of the crypto industry globally.

He explained that the Securities Commission of the Bahamas likely did not fail to execute any of its obligations, but contended that the regulatory regime for this sector is trying to keep up with the nuances of the technology and its capabilities and loopholes.

The SCB announced yesterday in a statement that it froze the assets of FTX Digital Markets and appointed a provisional liquidator for the company.

Edwards spoke to this paper following the release of the SCB statement that outlined the fate of Bahamas-headquartered FTX, and explained that the SCB should not be cast in a negative light in regards to the failure of one of the world’s largest cryptocurrency exchanges.

He said the quickly shifting cryptocurrency sector and the sheer size of the company, once valued at more than $30 billion, were more than enough to test a young and transforming Digital Assets and Registered Exchanges Act, and a regulator still making sense of an ever-changing industry.

Edwards said The Bahamas should not downplay the downfall of FTX, but own the situation and move forward with the lessons learned.

“It is what it is, it’s large, it’s significant, it’s huge,” he said.

“But we also must not cast the regulators in a light which really there weren’t positioned to deal with.

“We understand the crypto business might have had a lighter touch regulatory regime. We can now go back and ask ourselves, should it have been a lighter touch?

“But here are some juggernauts who are coming from an environment of totally no regulation, and its evolving. So over time I believe that if we evolve and learn, there are some positives that can come from this.”

Edwards said the FTX debacle is the first challenge the country is facing on its path to becoming a digital assets leader. According to him, how the country emerges from this problem will be a testament to how it can function in this space.

“When we think about regulation for a crypto business it’s different, it’s not like a bank, it’s not like a mutual fund or an insurance company,” said Edwards.

“We have to be honest and accept that that there are some things that may not be as tightly managed and regulated as, in hindsight, as we would want them to be.

“That said, the horse has bolted, but we have an opportunity to learn a lot.

The US Securities and Exchange Commission is looking into the inner workings of FTX, after it was announced on Tuesday that Bankman-Fried called Binance Chief Executive Officer Changpeng Zhao for a bailout, after there was a run on FTX’s token FTT that left the cryptocurrency exchange in a liquidity crisis. Binance, the world’s largest cryptocurrency exchange, revealed on Wednesday via Twitter that it will not make good on its conditional intent to bail out FTX.

Edwards said the position the SCB took on FTX, to freeze its assets and appoint a provisional liquidator, is a strong one.

“The fact that the regulators have stepped in and made such an important statement to the market, I think that will give some level of comfort… not total comfort, but some level of comfort that the matter is under careful consideration,” said Edwards.

Clarification: An earlier version of this story explained that Hubert Edwards, principal of Next Level Solutions Limited, told Guardian Business yesterday that the Securities Commission of The Bahamas (SCB) may have given the cryptocurrency sector a “lighter touch regulatory regime” that did not quickly expose the internal failings of FTX Digital Markets.

However, Edwards explained that globally regimes for regulating crypto have exacted a lighter touch due to the nascent stage of cryptocurrency and digital assets in general, and was not suggesting that the Securities Commission failed to properly regulate FTX Digital Markets.