FTX’s Bankman-Fried Raises Funds After Binance Trade Collapse

Hong Kong/Singapore/New York, November 10 (Reuters) – On Thursday, Sam Bankman-Fried, CEO of FTX, announced plans to raise funds to save the company as cryptocurrency exchanges attempt to fill a reported $8 billion funding hole. An urgent effort began. According to a tweet and a note to employees, Bankman-Fried said he was in discussions with “many players” in the crypto space, including Justin Sun, founder of crypto token Tron, after making a potential rescue deal with larger competitor Binance. collapse. However, he added in the memo, “I don’t want to make any hints about the chances of success.” The downfall of a 30-year-old crypto executor who transformed from an industry savior to a saver in a matter of days Confidence in cryptocurrencies with Bitcoin dropping below $16,000 overnight for the first time since late 2020 However, broad markets after better-than-expected US inflation data The surge also boosted the cryptocurrency in late morning trading. FTX’s native token, FTT, has fallen more than 90% this week and was trying to stay at around $3.50. Bitcoin was trading at $17,428, up 11%. Sun, founder of the cryptocurrency network Tron, tweeted on Thursday that “we are working on a solution with #FTX to start a path forward.” Sun did not respond to requests for comment. An FTX spokesperson declined to provide further details about the talks. Funding The seeds of FTX downfall were sown months ago in a mistake Bankman-Fried made after intervening to save another crypto company. According to the sources, users reported that within days after a news report raised questions about Alameda’s balance sheet and Binance CEO Changpeng “CZ” Zhao tweeted that his company would sell a full stake in FTX, users were able to get $6 billion in FTX within days, according to sources. of crypto tokens were withdrawn. Token, FTT. The spill caused a liquidity crisis in FTX. In a Reuters-confirmed memo, Bankman-Fried said next week it would “raise” its clients and “possible new investors” to do the right thing. Another exchange, OKX, Lennix Lai, financial markets director at OKX, told Reuters earlier this week that Bankman-Fried had approached $7 billion in debt in need of quick repayment. Bankman-Fried told investors that FTX is facing a funding shortfall of up to $8 billion and the company will have to file for bankruptcy unless it receives additional funding. Venture capital fund Sequoia Capital recorded zero exposure of $150 million on Wednesday. Canada’s Ontario Teachers’ Pension Plan, Tiger Global, and Japan’s Softbank are also FTX investors. One focus among investors is customer losses of unknown magnitude and investors. Crypto asset manager Coinshares said it had a total exposure of $30.3 million in FTX. Broker Robinhood (HOOD.O) said it had no direct exposure to FTX, but Bankman-Fried owns a stake in the company and its stock fell sharply on Tuesday. Wednesday. Danny Chong, CEO of decentralized finance company Tranchess, said, “The failure of the best exchanges is another dimension.” It could potentially have a bigger ripple effect than the failure of the stablecoin TerraUSD and cryptocurrency hedge fund Three Arrows Capital this year. FTX.com is investigating FTX.com’s customer-funding and cryptocurrency lending activities, according to sources who are aware of inquiries from US securities regulators. According to the message on the FTX website, nger withdrawal processing or new user acceptance. Bankman-Fried said the exchange’s US operation, FTX.US, was not financially impacted. “In Governance. He wrote in a tweet thread, “If I don’t want to, I won’t be around.” Georgina Lee from Hong Kong and Tom Westbrook from Singapore; Elizabeth Howcroft from London, edited by Paritosh Bansal: Megan Davies, Anna Driver and Matthew LewisOur Standard: The Thomson Reuters Trust Principle.
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