Crytocurrency

FTX is trying to get $9.4 billion in rescue funds, and the Bahamas has frozen some of its assets.

A source said Thursday that FTX is trying hard to get about $9.4 billion from investors and competitors. CEO Sam Bankman-Fried is trying to save the cryptocurrency exchange, which has been hit hard by a rush of customer withdrawals.

A source with direct knowledge of the situation says that Bankman-Fried has talked about getting $1 billion from Tron’s founder, Justin Sun, rival exchange OKX, and stablecoin platform Tether.

A source said that he is trying to get the rest of the money from other funds, such as Sequoia Capital and other investors in FTX.

But it wasn’t clear if Bankman-Fried would be able to get the money he needs or if these investors would be willing to help.

Related: As the Binance deal falls through, FTX’s CEO is looking at all of his options.

Paolo Ardoino, who is in charge of technology at Tether, tweeted that the company had “no plans to invest in or lend assets to FTX.”

Daniel Loeb’s Third Point is one of the 30 to 40 investors in FTX’s data room, but a source familiar with the situation says that the hedge fund is not talking about giving FTX more money.

When asked about the latest news about talks, FTX and Sequoia did not respond right away. OKX was also not available right away to talk about the latest news about talks. But earlier on Thursday, OKX told Reuters that Bankman Fried had talked to them this week and told them they had $7 billion in debts that needed to be paid quickly.

Lennix Lai, who is in charge of financial markets at OKX, told Reuters, “That was too much for us.”

The Bahamas Securities Commission, where FTX is based, also took action against the company by freezing the assets of FTX Digital Markets and “related parties.” FTX Digital Markets Ltd. is a company that is owned by FTX and has its licence in the Bahamas.

“The Commission has taken charge of the situation and will continue to do so,” the commission said, adding that putting the unit into “provisional liquidation” to save assets and keep the company stable was “the wise thing to do.”

When asked for a comment, FTX didn’t answer right away.

In a tweet, FTX said that it had made a deal with Tron to set up a special facility that would let clients move some crypto assets from FTX to wallets outside of the exchange. It said that at first, assets worth $13 million would be used to make the swaps possible.

A representative for Tron said that this was the “first step” for them, but that they were “open to talking about other rescue plans” and that the talks were still going on. “No doubt,” a credit line was one of the topics discussed, but a spokesperson stated that it had not been discussed in depth.

Earlier in the day, Bankman-Fried said in tweets and a memo to employees that Reuters saw that he was in talks with “a number of players” in the crypto sector, including Sun, after a possible rescue deal with larger rival Binance fell through.

But he said he didn’t want to “suggest anything about the chances of success.”

Bankman-Fried also said that his trading company, Alameda Research, which sources say was partly to blame for FTX’s problems, was winding down trading.

The situation with FTX is a shocking fall for the 30-year-old crypto executive, who was once worth nearly $17 billion. In just a few days, he went from being the industry’s saviour to needing to be saved.

The problems at FTX, one of the biggest cryptocurrency exchanges in the world, have caused a wider crisis of confidence in cryptocurrencies. Overnight, the price of bitcoin dropped below $16,000 for the first time since late 2020.

Pain in the crypto world Pain in the crypto world: https://graphics.reuters.com/GLOBAL-MARKETS/THEMES/lbvggrkadvq/chart.png

But cryptocurrencies got a boost from a rise in the market as a whole after U.S. inflation data was better than expected. At $3.83 in afternoon trading, FTX’s native token, FTT, was up nearly 140%, but it was down more than 80% for the week. Bitcoin had a 13% gain.

The number of trades in bitcoin futures and exchange-traded funds has exploded during the chaos.

FTX said it couldn’t handle any withdrawals, except for some in the Bahamas, where the rules are different. Bankman-Fried said FTX. The US, which is where the exchange is based, had not been financially affected.

RAISING FUNDS

Sources say that Bankman Fried made mistakes after he stepped in to save other crypto firms, which led to the downfall of FTX. Reuters reported that sources said FTX sent at least $4 billion to Alameda, including some customer deposits, to help the trading firm recover from a string of losses.

The Wall Street Journal said that Bankman Fried told investors that Alameda owes FTX about $10 billion. The newspaper said that FTX had lent more than half of its customers’ money to Alameda.

A source who knows about the investigation says that the U.S. securities regulator is looking into how FTX.com handles customer funds and crypto-lending.

Related: After problems at FTX, SBF falls off of Bloomberg’s list of billionaires.

Reuters could not find out what activities were being looked into. The White House said that the events show why there needs to be “prudent regulation.”

After a news story earlier this month raised questions about Alameda’s balance sheet and Binance CEO Changpeng “CZ” Zhao tweeted that his company would sell its entire share in FTT, which gives holders discounts on FTX trading fees, users rushed to withdraw $6 billion worth of crypto tokens from FTX within days. FTX ran out of money because of the outflow.

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