The U.S.FTX CEO Sam Bankman-Fried told his staff that after a deal with cryptocurrency exchange Binance fell through on Wednesday, he was looking into all of his company’s options.
The proposed deal between Bankman-Fried and Binance’s Chief Executive Officer Changpeng Zhao was the latest emergency rescue in the world of cryptocurrencies this year, as investors pulled out of riskier assets because interest rates were going up. Since its high point, the cryptocurrency market has dropped by about two-thirds, to $1.07 trillion.
Binance said in a statement on Wednesday that the company’s “due diligence” and the latest news stories about how customer funds were mishandled and alleged U.S. agency investigations led them to decide not to pursue the possible acquisition of FTX.com.
Related: As the Binance-FTX deal cools the market, cryptocurrencies try to stay steady.
It leaves Bankman-Fried, who is 30 years old and used to help other digital asset platforms that were failing, with fewer options.
In a message to FTX employees that was seen by Reuters, Bankman-Fried, who is from California but lives in the Bahamas, where FTX is based, said, “I’m working as quickly as I can on next steps.” “I wish I could give you all more clarity than I can.”
Forbes said that Bankman-Wealth Fried’s net worth was $17 billion as of September. Before becoming CEO of FTX, he made billions by betting on the prices of cryptocurrencies in Asia starting in 2017.
Bankman-Fried said in his message to staff that his goals were to protect customers and help staff and investors in any way he could.
“I’ll keep working as hard as I can to reach those goals as long as it’s the right thing to do.” “I’m looking at all my options.”
Bankman-Fried also told the employees that Binance hadn’t said anything bad about the deal before.
“I’m very sorry that we’re in this situation and that I played a part in it,” he wrote. “That’s my fault and mine alone, and it stinks.” I’m sorry, but it doesn’t help.”
In a later message to staff, seen by Reuters and sent around 6 p.m. Eastern Time (2300 GMT Wednesday), Bankman-Fried said, “I promise to post many more updates tonight.”
A request for comment from FTX was not answered right away by a company representative.
U.S. regulators are also looking at how FTX.com handles customer funds and how it lends out cryptocurrency. A source with knowledge of the investigation said on Wednesday that the U.S. Securities and Exchange Commission is looking into how FTX.com handled customer funds during a liquidity crunch and how it lent out crypto. It was first reported by Bloomberg.
Bloomberg also said that the Department of Justice (DOJ) is looking into the chaos and working with the SEC. A DOJ representative didn’t want to say anything about the Bloomberg report.
FTX’s problems are the latest sign of trouble in the fast-changing world of cryptocurrencies, where prices have dropped this year as a wider downturn in financial markets caused investors to dump riskier assets.
After going up quickly in 2020 and 2021, bitcoin is down more than 60% in 2022 and was last worth $16,277, which is 13% less than when the year began.
After falling 72% on Tuesday, the smaller token tied to FTX, FTT, fell another 67%.
Investors in FTX have lost money because of the chaos. Sequoia Capital said that it only has a small amount of exposure to FTX, so it wrote down its investment to $0.
“It has been a really bad year for the industry,” said Ryan Wong, a senior researcher at Huobi, a cryptocurrency exchange. Wong said that the chaos in the industry would “lead to a massive lack of trust in centralised institutions” by the public.
LIQUIDITY CRUNCH
Starting over the weekend, people started talking about FTX’s financial health, which led to $6 billion in withdrawals in the three days before Tuesday morning. Binance made an offer to buy the non-U.S. customers of a rival exchange’s belongings on Tuesday.
Some investors and analysts doubted that the deal to cover a “liquidity crunch” would go through because it was not binding and would depend on more research.
The Wall Street Journal reported on Wednesday that Bankman Fried told investors that he needs emergency funding to cover withdrawal requests of up to $8 billion, citing sources familiar with the situation. When asked for a comment, FTX didn’t answer right away.
Related: Even though sanctions were in place, Binance helped Iranian companies trade $8 billion.
Zhao tweeted a letter to staff earlier on Wednesday saying that there was no “master plan” behind the deal and that “FTX going down is not good for anyone in the industry” and is not a win.
Zhao also told investors not to trade FTT tokens and not to worry about how much they are worth.
Binance wasn’t the only possible partner that had been looked for. Before the Binance deal, Bankman-Fried tried to make a deal with the cryptocurrency exchange OKX on Monday morning, but OKX turned him down.