“Crypto” platform FTX in search of capital to survive

Posted on November 10, 2022, 7:34 pm

by Angus Berwick and Tom Westbrook

Nov 10 (Reuters) – Crypto-asset exchange FTX was trying to raise about $9.4 billion (9.3 billion euros) from investors and rivals on Thursday, it said. We learned from a source familiar with the matter, her continued asset withdrawals. customers threatening its survival after the abandonment of the acquisition project by Binance.

FTX chief executive Sam Bankman-Fried said in a note to employees that it is in discussions with “a number of players” in the crypto-asset industry, including Justin Sun, the creator of the Tron token.

But he added that he did not want to “suggest anything about the chances of success” of his approach and again said he regretted the situation the company found itself in.

He explained that his financial analysis company, Alameda Research, which is partly at the root of FTX’s difficulties according to some sources, was in the process of winding down its activities.

Several sources told Reuters that FTX transferred about $4 billion to Alameda from customer deposits to bail it out after a series of heavy losses.

The severe difficulties of FTX, which had become one of the world’s largest crypto-asset exchanges, caused a new crisis of confidence in the “crypto” sector, resulting in a price rebound. Bitcoin below $16,000, lowest since late 2020.

However, bitcoin regained ground on Thursday, benefiting from a general increase in risk appetite in markets following better-than-expected inflation figures in the United States.

FTT, the token created by FTX, bounced back by more than 130%, but still showed a decline of more than 80% compared to its price last week.

In a message posted on Twitter, Justin Sun said, “We are building a solution with FTX to find a way out,” without further details. Asked by Reuters, Justin Sun did not respond.

A spokesman for FTX declined to comment.

According to news site Axios, FTX has also approached the Kraken exchange.

US AUTHORITIES INVESTIGATING

A message published on the FTX website informs visitors that the platform no longer allows any withdrawals or account openings.

According to The Wall Street Journal, Sam Bankman-Fried told the company’s shareholders that Alameda Research owed FTX about $10 billion; The daily adds that FTX has loaned Alameda about half of its customers’ deposits.

US financial authorities have opened an investigation into FTX’s handling of customer deposits and its crypto-asset lending activities, according to a source familiar with the investigations.

FTX customers began withdrawing their holdings en masse last week after a news article appeared that highlighted questions about the strength of Alameda’s balance sheet.

These withdrawals led Binance CEO Changpeng “CZ” Zhao, one of the industry’s most famous figures, to announce on Twitter that his company would be removing all of its FTTs, which amplified FTX’s liquidity crisis .

After announcing its intention to acquire FTX, Binance decided on Wednesday to abandon its plan, which it justified with a complete review of accounts, the publication of new information on the management of customer deposits and the opening of the investigation by the US authorities.

Some FTX shareholders have already written down their holdings significantly or even completely, such as venture capital fund Sequoia.

Other FTX shareholders include Canadian pension fund Ontario Teachers Pension Plan and investment funds Tiger Global and Softbank.

(Reporting by Angus Berwick and Anirban Sen in New York, Georgina Lee in Hong Kong, Tom Westbrook in Singapore, Elizabeth Howcroft in London and Hannah Lang in Washington, French version Marc Angrand)

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