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As FTX tries to survive a difficult time, CEO Sam Bankman-Fried is seeking to raise a rescue package of up to $9.4 million to help the situation.
This came after Binance pulled out from the deal to acquire the crypto exchange amid the ongoing liquidity crisis. When it conducted its corporate due diligence, the CZ-owned company found some major mishandling of customers’ funds on FTX’s books. Binance noted that it would not be furthering the acquisition deal as the issues are beyond its control or ability to help.
After declaring a $214 million investment in FTX, VC firm Sequoia Capital withdrew its commitment on news that CZ was liquidating hid $2 billion worth of FTT tokens. Sequoia wrote that “a liquidity crunch has created solvency risk for FTX”.
FTX Seeks Rescue Package to Stay Solvent
According to a source familiar with the ongoing dealings with FTX, Bankman-Fried is in talks with certain persons on the rescue package. The CEO is looking to secure $1 billion from crypto exchange OKX, $1 billion from Tether, $1 billion from Tron founder Justin Sun, and $2 billion from some investment funds. Could this be the “solution” Justin Sun referred to when he said his team was working with FTX to “initiate a pathway forward?” The Tron top executive announced yesterday that he was colluding with the distressed company to manage the situation. At the time he posted the tweet, Sun did not include other detail on the solution, but SBF retweeted the post, indicating that both parties were indeed “putting together a solution.”
In addition to financial contributions from individuals and organizations, FTX seeks more funds from other investors to make up the complete rescue package. One of the investors is fund management company Third Point. The source confirmed that SBF had made little progress in his effort to garner the funds. Regardless, the CEO is against filing for bankruptcy or appointing restructuring advisers. The person familiar with the matter added that there are a lot of uncertainties surrounding the happenings, and discussions are liable to change.
“I f****d Up”, SBF Acknowledges
Bankman-Fried told investors about the pressing need for the rescue package for FTX to stay solvent. He added that the crypto exchange is facing a shortfall of funds of around $8 billion. At this desperate time, FTX is ready to accept the rescue package in the form of debt, equity, or both. The CEO is sober and has acknowledged that he “f****d up.” He said the exact words to his employees and investors, adding that he would be “incredibly, unbelievably grateful” to investors that help the company.