After going silent for several days during rival Binance's near acquisition of his faltering cryptocurrency platform, FTX chief executive Sam Bankman-Fried took to Twitter Thursday to explain how his liquidity issues came to light.
What Happened: Bankman-Fried explained via Twitter that the $32-billion company poorly labeled bank-related accounts. This caused the CEO to think that user margins were lower than they actually were, he said.
In other words, the company’s liquidity was far lower than Bankman-Fried believed, he said.
See Also: Troubled FTX Faces SEC Probe And 'Urgently Needs' $8B To Avoid Bankruptcy
A series of withdrawals by users of the platform over the weekend — in the amount of $5 billion — caused the liquidity crunch.
FTX initially reached out to Binance to help cover it.
Alameda Research, Bankman-Fried’s quantitative trading firm behind FTX, has since shut down its website.
What's Next: All of FTX’s existing collateral will go to the users of the platform, followed by investors and employees, if the company can raise enough liquidity in the coming weeks.
Bankman-Fried also said the firm is winding down its trading.
Binance recently completed due diligence on the embattled crypto platform and decided to not proceed with the proposed transaction to acquire FTX and its remaining assets.
Binance cited mishandled customer funds and a U.S. regulatory investigation as reasons for not buying FTX.
“At some point I might have more to say about a particular sparring partner, so to speak," Bankman-Fried said. "But you know, glass houses. So for now, all I'll say is: well played; you won.”
Bankman-Fried is almost certainly referencing Changpeng Zhao, the Binance CEO.
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