FTX founder Sam Bankman-Fried posted his overview of the exchange’s collapse in his recently created Substack.

In the post, entitled “FTX Pre-Mortem Overview,” Bankman-Fried effectively equated his exchange’s collapse with those of Voyager and Celsius. He then proceeds to relate the three primary reasons for the exchange’s failure, from his perspective.

SBF’s Reasons for Implosion

First, the net asset value of Bankman-Fried’s Alameda Research rapidly expanded to roughly $100 billion over the course of 2021. Its balance sheet also reflected $8 billion of net borrowing against $7 billion of liquidity on hand. Unfortunately, Bankman-Fried said that Alameda failed to sufficiently hedge its market exposure.

Crypto assets then plummeted in value over the course of 2022, due to turbulent global economic conditions, Bankman-Fried said. He said this caused Alameda’s assets to fall roughly 80% in value. Bankman-Fried repeatedly referred to earlier collapses, including Three Arrows Capital, insisting that the same market forces led to Alameda’s peril.

Finally, Bankman-Fried says Alameda’s insolvency was caused by “an extreme, quick, targeted crash precipitated by the CEO of Binance.” He said this contagion then spread to FTX, whose collapse was similar to Three Arrows Capital in its cascading effects.

FTX Insolvency

In spite of these events, Bankman-Fried said that FTX retained upwards of $8 billion in “assets of varying liquidity” upon filing for bankruptcy. He also said that FTX US remains fully solvent and ought to be able to return all customers’ funds.

The former chief executive continues claiming to have received “numerous potential funding offers” that could have enabled FTX to survive. “I believe that, had FTX International been given a few weeks, it could likely have utilized its illiquid assets and equity to raise enough financing to make customers substantially whole,” he said.

Finally, Bankman-Fried reasserts that he did not steal customer funds nor “stash billions away.” Instead, he intends to use what assets he retains to make customers whole, however, under certain conditions. “I have, for instance, offered to contribute nearly all of my personal shares in Robinhood to customers,” he said,” if the Chapter 11 team would honor my D&O legal expense indemnification.”

Community Reacts to SBF

As expected, the crypto community was not impressed with Bankman-Fried’s excuses. One Twitter user took issue with his repeated comparisons to other collapses. “Amazing to me that SBF_FTX is still comparing FTX to lenders like BlockFi, Voyager, and Celsius, who lent out customers funds with poor risk management,” said Udi Wertheimer.

Amazing to me that @SBF_FTX is still comparing FTX to lenders like BlockFi, Voyager, and Celsius, who lent out customers funds with poor risk management.

FTX shouldn’t have been lending out customer funds AT ALL, regardless of risk management.

Yes, funds WERE stolen Sam. pic.twitter.com/XUYskjgOSt — Udi Wertheimer (@udiWertheimer) January 12, 2023

Meanwhile, as the concluding comment on his eight takeaways from the Substack post, another Twitter user noted several omissions. “The glaring omission in all of this (both from SBF and Ray) is there is no indication of what the total customer deposits at FTX Trading were,” said MetaLawMan.

My commentary:

The glaring omission in all of this (both from SBF and Ray) is there is no indication of what the total customer deposits at FTX Trading were.

So, while estimates of assets seem to be coalescing around $8 to $10 billion, we still don't know the size of the hole. — MetaLawMan (@MetaLawMan) January 12, 2023