Cryptocurrency exchange FTX CEO Sam Bankman-Fried warned FTX investors to expect the exchange to file for bankruptcy if it doesn’t get a cash infusion, facing an $8 billion shortfall following a liquidity crisis.
FTX Is On The Brink of Bankruptcy
A Wall Street Journal (WSJ) article reported that FTX’s CEO told investors in a Nov. 9 call that FTX could resolve its financial catastrophe. He outlined that he is aiming to raise $3 billion to $4 billion in equity, and could take on some debt to cover the shortfall, emphasizing that it needed emergency funding in order to meet the flood of withdrawal requests. Additionally, it would be unable to “settle withdrawals as its collateral was dropping in value and couldn’t be liquidated.” On this same day, the FTX website posted a new banner stating that it is “currently unable to process withdrawals” and strongly advised users against depositing money into the exchange.
WSJ stated that people familiar with the matter Bankman-Fried said he would use his personal wealth to ‘make customers and investors whole’ and explore all his options to save FTX.
Binance’s Change Of Heart To Save FTX
The world’s largest crypto exchange by volume, Binance, said it had signed a non-binding letter of intent to purchase FTX amid a liquidity crisis. However, the plan lasted just over 24 hours, Binance stated today it would not follow through on the deal. Citing FTX’s financial problems after reviewing the company’s structure and books. Moreover, Binance mentioned that their goal was to be able to support FTX’s customers to provide liquidity but the issues are beyond their control or ability to help.
In a tweet, the company also said that as a result of corporate due diligence and recent news reports regarding mishandled customer funds and alleged U.S. agency investigations, it has decided that it will not pursue the potential acquisition of FTX.
At the time of writing this article, FTX’s token FTT fell as low as $2.06, 45.62% down in the past 24 hours. Meanwhile, Binance’s token BNB stumbles at $282.34, a 10.90% drop in the past day. The market capitalization for cryptocurrencies slipped below $1 trillion, as Bitcoin, the world’s most popular virtual currency has fallen below $17,000 for the first time since November 2020.
