FTX founder wants to make customers whole

‘My one goal is to do right by customers’

Former FTX CEO Sam Bankman-Fried, whose multibillion-dollar crypto empire crumbled in the span of days, said yesterday he is committed to making his customers whole.

“My goal — my one goal — is to do right by customers,” Bankman-Fried tweeted.

“I’m contributing what I can to doing so. I’m meeting in-person with regulators and working with the teams to do what we can for customers. And after that, investors. But first, customers.

“My goal: a) Clean up and focus on transparency; b) make customers whole.”

FTX, which was the third largest crypto exchange in the world, is based in The Bahamas and broke ground on its $60 million headquarters in western New Providence in April.

Bankman-Fried, 30, who had a net worth of $16 billion until recently, said The Bahamas’ regulatory regime made it an attractive destination for his business.

But the company hit troubled waters this month.

A report leaked to a media outlet showing that Alameda Research, a hedge fund ran by Bankman-Fried, and FTX had close financial ties, even though they are supposed to be separate businesses.

Binance CEO Changpeng Zhao, who heads the world’s largest crypto exchange, tweeted that he was pulling out of FTX. 

The price of FTT, the cryptocurrency used by FTX, plummeted and there was a mad rush by traders to pull out of FTX.

FTX was unable to process the requests, some $6 billion, because it did not have the money, and, after a failed deal with Binance to bail it out, filed for bankruptcy protection in the US district of Delaware last week.

The Securities Commission of The Bahamas froze FTX’s assets last week and applied to the Supreme Court to appoint joint provisional liquidators.

Last Thursday, the commission applied to the Supreme Court to appoint Brian Simms, KC, as a court supervised provisional liquidator.

The commission announced late Monday night, that the court approved Kevin Cambridge and Peter Greaves of PricewaterhouseCoopers as joint provisional liquidators.

“The investigations into these events are ongoing, and the commission will extend its full assistance to the police if and when required.”

In a court document filed in the United States as part of the chapter 11 bankruptcy, attorneys for FTX said the “events that have befallen FTX over the past week are unprecedented”.

“Barely more than a week ago, FTX, led by its co-founder Sam Bankman-Fried, was regarded as one of the most respected and innovative companies in the crypto industry,” the attorneys said in the document, which was filed on Monday.

The attorneys said FTX faced a severe liquidity crisis that necessitated it filing for bankruptcy protection.

“Questions arose about Mr. Bankman-Fried’s leadership and the handling of FTX’s complex array of assets and businesses under his direction.

“As the situation became increasingly dire, Sullivan & Cromwell and Alvarez & Marsal North America, LLC were engaged to provide restructuring advice and services to FTX.

“At approximately 4:30 a.m. on Friday, November 11, after consultation with his own legal counsel, Mr. Bankman-Fried ultimately agreed to step aside, resulting in the appointment of John J. Ray III, an experienced restructuring executive, as chief executive officer.”

The attorneys added, “As stabilization of the business continues, Mr. Ray and the FTX professionals are moving to the next phase. The debtors are preparing requests for necessary relief from the court in order to move these cases forward in the most organized and efficient manner possible under the unprecedented circumstances.”

Deputy Prime Minister Chester Cooper said yesterday he is confident that The Bahamas’ financial services sector will persevere.

“We’ve had curve balls thrown at us before in financial services and we persevered,” he said.

“We’ve pivoted in financial services many times and I expect that we’re going to do likewise in the digital assets business.”

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Travis Cartwright-Carroll

Travis Cartwright-Carroll is the assistant editor. He covers a wide range of national issues. He joined The Nassau Guardian in 2011 as a copy editor before shifting to reporting. He was promoted to assistant news editor in December 2018.

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