FTX Warns of Bankruptcy Without Rescue for $8 Billion Shortfall
FTX
FTX investors have been warned that the crypto exchange may be forced to file for bankruptcy protection if it doesn’t get a cash infusion, Bloomberg reported Wednesday.
The news follows reports that Binance balked at an earlier promise to buy the troubled trading empire after looking at its books. Bloomberg reported the FTX exchange faces an $8 billion shortfall.
SAM Bankman-Fried told FTX.com investors on Wednesday (Nov 9) that without a cash injection the company would need to file for bankruptcy, according to a person with direct knowledge of the matter.
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Before Binance pulled an about-face and bailed on its takeover offer, Bankman-Fried informed investors his crypto exchange faced a shortfall of up to US$8 billion, said the person, who requested anonymity discussing private talks. FTX is attempting to raise rescue financing in the form of debt, equity, or a combination of the two, the person said.
FTX has been on a tailspin for a week following CoinDesk’s reports of the blurred lines in the books of Sam Bankman-Fried’s once-mighty empire.
Bankman-Fried’s acknowledgement of his firm’s deep financial hole and limited options reflects the uncertain fate of FTX and its clients. It’s the latest twist in a stunning turn of events for the crypto industry’s onetime wunderkind, who was once worth US$26 billion and likened to John Pierpont Morgan.
Still, Bankman-Fried remained defiant during a hectic period of roughly 24 hours that included mounting speculation that Binance wouldn’t go through with the deal.
He repeatedly told investors during a conference call on Wednesday afternoon that it was simply not true that Changpeng Zhao was walking away from the takeover, the person said.
