Sam Bankman-Fried Tells Investors FTX Needs $8 Billion Bailout

The announcement came in a call to investors on Nov. 9, just after Binance pulled out of the deal to acquire FTX.

SBF said he hoped the beleaguered exchange could raise as much as $3-4 billion in equity. He added that FTX could also raise some debt, according to the WSJ citing people familiar with the matter.

He would also use some of his personal wealth to help recompense investors, he said. However, that may have plummeted a lot this week, according to Bloomberg, which has knocked SBF off its billionaire’s list.

The outlet said his net worth had plunged 94% from around $16 billion to less than $1 billion. Bloomberg’s wealth index estimated SBF’s net worth to be around $26 billion at the peak.

SBF: Crypto’s Most Wanted

He also put some of the blame on a campaign that had caused a run on the exchange, added the report. On Nov. 6, FTX processed a lot more withdrawals than usual, to the tune of $4 billion.

Some were backlogged waiting for settlement which caused more withdrawals in a cascade effect which escalated to $6 billion by Nov. 7. By then, FTX was unable to settle as its collateral had dropped in value and could not be liquidated.

Rival crypto exchange Binance offered a lifeline on Nov. 9, but it was too late, and the contagion had spread. Binance then backed out of the acquisition proposal stating that it wanted to help with liquidity but the “issues are beyond our control or ability to help.”

It also cited “latest news reports regarding mishandled customer funds and alleged US agency investigations” as a reason to withdraw.

In response to the fiasco, Binance said the exchange has increased its Secure Asset Fund for Users (SAFU) to $1 billion again.

Naturally, the response on crypto Twitter was vehement as SBF becomes the latest industry monster.

The problem is that the only entity that is registered in the US is FTX.US, not FTX.com. The crypto contagion from this will be far and wide. Companies such as Galaxy Digital are already revealing how much exposure they had to FTX.

Crypto Market Capitulation

Crypto markets have fallen to a new bear cycle low as total capitalization dumped a further 11% on the day to $844 billion. Markets are now down more than 72% from their peak capitalization of just over $3 trillion in November 2021.

Bitcoin has dumped 12.2% on the day, tumbling to $16,178, while Ethereum tanked 13% to $1,143 at the time of writing, and they don’t appear to have bottomed yet.

The post Sam Bankman-Fried Tells Investors FTX Needs $8 Billion Bailout appeared first on CryptoPotato.

newsby.top • 2023