Bankman-Fried: “Screwed up” with FTX – 4 billion demanded by investors

- Advertisement -

With no cash on the table, will declare bankruptcy, was Sam Bankman-Fried’s warning to investors, according to Bloomberg sources, while Binance has pulled out of the acquisition deal.

During a briefing on Wednesday, before Binance committed to its takeover bid for FTX, Bankman-Fried told investors in the cryptocurrency exchange that it faces a deficit of up to $8 billion and needs $4 billion to keep the company within its obligations.

FTX is attempting to raise funding for its rescue in the form of debt, equity or a combination of both, the sources said.

“I blew it,” Bankman-Fried admitted to investors, adding that he would be “incredibly, incredibly grateful” if they could help.

The recognition of his company’s mounting problems and limited options is a stunning turnaround for the one-time “wunderkind” of the cryptocurrency market, once valued at $26 billion and compared to JP Morgan.

His admission also underscores the uncertainty surrounding FTX, its customers and the crypto markets.

Not only are investors and lenders in the same “fate”, but any customer has been unable to recover their assets since certain withdrawals were halted earlier in the week.

The bankruptcy of cryptocurrency companies Celsius and Voyager led to billions in customer money being tied up in bankruptcy proceedings.

Prominent list of Investors

FTX has a prominent list of backers including Sequoia Capital, BlackRock, Tiger Global Management and SoftBank.

Sequoia has reduced the value of its holdings in and, an indication that the company sees no clear path to recovering its investment.

However, Bankman-Fried remained combative during a tumultuous period of about 24 hours that included intensifying speculation that Binance would not proceed with the deal.

He repeatedly told investors during Wednesday afternoon’s conference call that it was not true that Changpeng Zhao would withdraw from the takeover, the person said.

About an hour later, Binance announced that it was indeed retreating.

“Our hope was to be able to support FTX customers to provide liquidity, but the issues are beyond our control or our ability to help,” said Binance, the crypto exchange founded by Zhao.

SEC is Coming

In addition to the financial pressures, FTX is “gaining” the attention of authorities in the US as the SEC investigates whether the company properly managed customer funds, as well as its relationship with other parts of Bankman-Fried’s crypto empire, including trading house Alameda Research. Officials from the Department of Justice are also working with SEC lawyers.

Zhao said in a memo earlier Wednesday that there was no “basic plan” to take over FTX and that “user confidence was severely shaken.”

The growing concern about contagion risk is reflected in the prices of digital assets. Bitcoin fell below $16,000, the lowest in two years, after Binance’s announcement, and on Thursday it recovered some of the losses.
- Advertisement -
- Advertisement -
- Advertisement -


- Advertisement -

Must Read

Read Next
Recommended to you