He appeared to be a crypto luminary for a short time: former FTX CEO Sam Bankman-Fried.

Now he has a lot to explain, including how his empire failed so quickly, so spectacularly.

Yes, he admits, he was wrong: the crypto exchange's debt was $13 billion, not "just" five.

FTX has become "cocky and careless", according to his tweets - not he himself, mind you. Admitting one's own mistakes is difficult.

Martin Hock

Editor in Business.

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The roughly $20 billion in assets came with risks, and those came with the risks of other collateral and the platform itself, Bankman-Fried writes.

And then the rush to the facilities came.

Around a quarter of customer funds were withdrawn every day.

Billion dollar doorknockers

Nevertheless, "SBF" is said to have tried to collect seven billion dollars last weekend with the support of his father by frantic calls to competitors and financial investors, reports the Reuters news agency, citing insiders.

Sequoia, which holds shares in FTX alongside the world's largest asset manager Blackrock and the technology investor Softbank, was shocked by the sum requested.

Apollo initially asked for more information, only to then cancel.

None of the three companies wanted to comment on this topic.

If this still gives the impression of desperation and, at worst, incompetence, other details give a different impression.

Customer funds from FTX were used to plug the financial gaps of the separate trader Alameda Research, says Cyrus de la Rubia, chief economist at Hamburg Commercial Bank in the FAZ podcast finance and real estate - it says a total of around ten billion dollars.

In presentations to investors, the same assets appeared on both balance sheets.

Some of the money was used to offset losses related to the collapse of the cryptocurrency TerraUSD and the bankruptcy of the crypto bank Voyager Digital.

At least a billion disappeared that way.

back door in accounting

When Bankman-Fried revealed the balance sheet deficit to his management, it was shocked, according to Reuters.

Which is not surprising, since former Google software developer Gary Wang, a close confidant of the FTX boss, is said to have built a backdoor into FTX's accounting program.

This could have been used to transfer funds to Alameda unnoticed, without this being apparent to other employees.

Wang could not initially be reached for comment.

In recent, cryptic tweets, struggling for explanations, "SBF" ended with comments like "that what matters is what you do", i.e. good or bad and not that you talk about doing it.

"But that doesn't matter now.

What's important is that I do the best I can.

And to do everything I can for FTX customers.”

However, the insolvency administrator has been in charge of the trading platform for a long time.

Successor John J. Ray also made this clear on Twitter: Bankman-Fried no longer speaks on behalf of the company.

"You belong in prison"

Others are angry, reports Bloomberg news agency.

"You will have a lot of time to sort it all out in jail" or "You have unscrupulously dealt with customer funds" it says on Twitter.

You belong in jail."

A number of employees should also be angry.

Because some of them would have had their salary paid out in FTT, the token of the crypto exchange.

But its price has fallen 94 percent since the beginning of the month, and there seems little hope of a recovery.

A manager has invested all of his savings in FTT, an employee told Reuters.

"Out of loyalty to Sam."

As is usual in the US, the class action lawsuit against Bankman-Fried was not long in coming.

The interest-bearing cryptocurrency accounts offered by FTX should not have been sold due to a lack of a license in the USA, Bloomberg quotes from a lawsuit filed in Miami.

Not only Bankman-Fried is being sued, but also football superstar Tom Brady and tennis player Naomi Osaka, both of whom were advertisers for FTX.

There were no comments from those affected.

Meanwhile, concerns about the consequences are not diminishing.

After crypto broker Genesis suspended payouts in the lending business, all eyes are on crypto conglomerate Digital Currency Group, which, in addition to Genesis, also owns Grayscale, the world's largest crypto fund, and crypto news site Coindesk.

Genesi's rental business had already shrunk by 80 percent in the run-up to the FTX bankruptcy in the third quarter.

Genesis had also been the largest creditor to failed crypto hedge fund Three Arrows.

The Digital Currency Group is demanding $1.2 billion from the bankruptcy estate.

Meanwhile, it is becoming increasingly clear that the crypto lender BlockFi will file for bankruptcy, even though it emphasized that it had sufficient liquidity when it announced that it would suspend withdrawals.

BlockFi received a $400 million revolving credit line from FTX US in July that included an option to buy the company.

BlockFi has made loans to Alameda Research, reports Bloomberg.

The Winklevoss brothers’ crypto exchange Gemini is also facing problems and has stopped payouts from the “Gemini Earn” product.

Genesis was listed as Gemini Earn's only accredited borrower.

According to Bloomberg, it is about customer funds of 700 million dollars.

Whether investors get their money back depends on how Genesis goes on.

Options are currently being explored.