Sam Bankman-Fried, founder and CEO of the troubled cryptocurrency exchange FTX, appears to have retracted his words about the safety of client holdings on FTX.
Bankman-Fried has deleted a Twitter thread where he tried to assure customers that FTX and the assets on the platform were “fine.”
FTX CEO took to Twitter to post the thread of four different tweets on Nov. 7, claiming that FTX had “enough to cover all client holdings.” Bankman-Fried also stated that the firm didn’t invest client assets and has been processing all withdrawals and “will continue to be.”
“We have a long history of safeguarding client assets, and that remains true today,” one now-deleted tweet said.
According to multiple sources on Twitter, FTX CEO removed his “assets are fine” thread on Nov. 8 at around 10:30 pm UTC, or a few hours after announcing a strategic transaction with Binance. As part of the deal, Binance agreed to acquire FTX in a move to help the troubled exchange overcome a “significant liquidity crunch.”
The acquisition news came shortly after several reports hinted that FTX had temporarily stopped withdrawals for the majority of coins. Many in the crypto community anticipated these events amid sluggish FTX withdrawals, concerns about the leaked balance sheet of FTX’s sister firm Alameda Research as well as Binance’s decision to liquidate its FTX Token (FTT) holdings.
The community has been outraged about SBF opting to delete the tweets, with many blaming the FTX founder for “blatant lies” about the status of assets on the exchange.
One Twitter user, Pledditor, also pointed out that SBF previously retweeted a random account that implied an airdrop for those who don’t withdraw their coins from FTX. The crypto enthusiast suggested that the United States Securities and Exchange Commission needs to go after such actions, stating: “An implicit promise that SBF doesn't actually to be held accountable for because he himself did not tweet it.”
Related: Saying ‘not financial advice’ won’t keep you out of jail — Crypto lawyers
Some crypto observers aren’t too optimistic about the future events for FTX users that continue to store their holdings on the exchange. According to Dylan LeClair, senior analyst at UTXO Management, FTX customers are now unsecured creditors.
Don't mean to be the bearer of bad news here, but if it isn't clear already, if you still have funds on FTX, they're gone. You're an unsecured creditor.— Dylan LeClair (@DylanLeClair_) November 8, 2022
The probable outcome is Chapter 11 & a class action lawsuit that draws out for years, where you get $0.10-$0.30 on the dollar.
The FTX news triggered another massive crash on the crypto market that has already been already on the decline this year, with Bitcoin (BTC) tanking to below $18,000. The total market value lost about 10% over the past 24 hours at the time of writing, according to CoinGecko.