According to reports by Reuters, FTX is exploring every possible avenue to raise about $9.4 billion from its investors and rivals as customers rush to withdraw their funds.
FTX CEO Sam Bankman-Fried is trying desperately trying to acquire funds to save the troubled cryptocurrency exchange FTX as customers rush to withdraw funds. Reports indicate that Bankman-Fried has discussed raising $1 billion each from Tron founder Justin Sun and rival exchange OKX as well a stablecoin platform Tether. According to a source familiar with the matter, the CEO is seeking to raise the remaining funds from current FTX investors such as venture capital fund Sequoia Capital. It is not yet clear whether Bankman-Fried will be able to raise the necessary funds and whether investors will participate. Paolo Ardoino, chief technology officer at Tether tweeted that it had “no plans to invest in or lend assets to FTX.” OKX revealed earlier in the day that Bankman-Fried had approached it and revealed that liabilities of $7 billion needed to be covered urgently.
Binance Backs Out of FTX Acquisition
FTX and Bankman-Fried have been left with no other option but to raise the necessary funds to accommodate customer withdrawals after its rescue deal with Binance fell through. Binance CEO, Changpeng “CZ” Zhao, announced on it would no longer proceed with its proposed deal to acquire FTX. CZ announced on Tuesday that Binance had signed a non-binding letter of intent to acquire the troubled exchange. He added that the deal was however contingent on the assessment of FTX’s internal data and loan commitments.
As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of https://t.co/FQ3MIG381f.
— Binance (@binance) November 9, 2022
FTX’s Troubles
Binance stepped in when FTX reached out saying it was undergoing a serious liquidity issue and appeared to have stopped processing withdrawals. FTX was said to be under severe pressure after growing but unsubstantiated rumors around the balance sheet of its sister firm Alameda Research were purported causing growing concerns that another Terra-like situation may occur. Users rushed to withdraw $6 billion in tokens from FTX within days after CZ announced that Binance would liquidate its entire share in FTT, FTX’s native token, causing a severe liquidity crunch at FTX. According to sources, FTX transferred at least $4 billion to Alameda, including come customer deposits. Bankman-Fried revealed to investors that Alameda owes FTX about $10 billion, per reports by the Wall Street Journal. The publication added that FTX had lent more than half of its customer funds to Alameda. FTX has also managed to attract the attention of U.S. securities regulators who are now investigating FTX.com’s handling of customer funds and crypto-lending activities.
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