Sam Bankman-Fried has asked investors for $8 billion in emergency funding to cover the shortfall caused by the spate of withdrawal requests to his crypto exchange in recent days..
According to a report in the Wall Street Journal (WSJ), which cites “people familiar with the matter,” the CEO made the request to investors in a Nov. 9 call outlining ways to help resolve FTX’s financial woes..
The source suggests that Bankman-Fried is looking to raise between $3 billion and $4 billion in capital. and that the exchange could get some debt to cover the shortfall.
Bankman-Fried also said he would use his personal wealth to “compensate clients and investors.”according to the WSJ source.
It is also understood that, during the call, the CEO of FTX attributed part of the blame for the FTX situation to what he claims is a campaign against the exchange, which has caused numerous investors to seek cash out for fear of losing their investment.
A Reuters report on November 8 suggests that FTX saw around $6 billion in withdrawals in the 72 hours leading up to Nov 8.
It is also reported that in FTX call could not “settle withdrawals as their collateral was falling in value and could not be liquidated”.
On the 9th of november, the FTX website posted a new banner stating that “they are currently unable to process withdrawals. We strongly advise against depositing”.
In the meantime, a Nov. 9 report from Bloomberg claims that Bankman-Fried told investors that without an injection of cash, the company would have to file for bankruptcy, citing a “person with direct knowledge of the matter”.
The Bloomberg source also appears to confirm suggestions that FTX is looking to raise bailout funding. on a combination of debt and equity to save itself from liquidation.
On Nov 8, Binance signed a non-binding letter of intent to buy FTX, but withdrew from the deal less than 48 hours later.citing problems that were “beyond our control or ability to help.”
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
As a result of corporate due diligence, as well as recent news reports regarding mishandled customer funds and alleged investigations by US agencies, we have decided that we will not proceed with the potential acquisition of https://t. co/FQ3MIG381f
Cointelegraph has contacted FTX for confirmation of the shortfall and the content of the investor call, but has not received a response at press time.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.