Sam Bankman-Fried, the CEO of the troubled FTX cryptocurrency exchange, told investors on Wednesday that the company would have to declare bankruptcy if it could not raise the money needed to continue operating.
According to a Bloomberg news report, Sequoia Capital, BlackRock Inc, Tiger Global Management, and SoftBank Group Corp are just a few of the well-known investors in FTX. Sequoia has been reported to have listed the full value of its stakes in FTX in hopes it may not recover them.
Bankman-Fried had earlier told his investors that FTX needed $4 billion to continue its operation as the company already has a net loss of over $6 billion. An anonymous source also reported that FTX is looking to raise debt, equity, or a combination of the two in order to obtain rescue funding.
The CEO of Binance exchange, Changpeng Zhao had earlier announced on Tuesday the plans to acquire FTX in the face of its liquidity crisis, but that plan seems to have been thwarted as Zhao made a statement in a note to staff that he believes that giving a bailout to Bankman-Fried is going to work out.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ 🔶 Binance (@cz_binance) November 8, 2022
As regards FTX receiving support from investors and key industry players, Justin Sun who is the founder of Tron, tweeted earlier that he is ready to stand behind FTX. He added that his company is partnering with FTX to find a way forward.
Binance Chief Backs-out from FTX Takeover
Zhao announced on Twitter that Binance is no longer interested in buying FTX because of the most recent news stories about mishandled client funds and purported US SEC investigations.
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
Another reason given by Zhao for pulling out of the takeover agreement is that he believes the buyout will make Binance a target for attack because it will be seen as the biggest cryptocurrency exchange globally.
“Each time a crucial business in a certain sector fails, retail customers will suffer. Over the past few years, the cryptocurrency ecosystem has become more resilient, and we believe that eventually, the free market will weed out anomalies that misappropriate user cash,” Zhao said.
Zhao highlighted that getting licenses will be more difficult for exchange platforms across the globe because Regulators will closely monitor exchanges going forward.
“The faith in the cryptocurrency market has been severely undermined by FTX’s impending collapse, which would lead to stricter regulatory monitoring,” says Zhao.
