In brief
- FTX is on the brink of bankruptcy unless it receives an injection of cash, CEO Sam Bankman-Fried reportedly told investors today.
- Binance planned to purchase FTX amid a liquidity crisis, but said today that it would not follow through with the deal.
Cryptocurrency exchange FTX may be forced to declare bankruptcy if it does not receive an infusion of fresh capital, founder and CEO Sam Bankman-Fried reportedly told investors on Wednesday.
That’s according to a report from Bloomberg, citing an unnamed source who was privy to the conversation. Bankman-Fried reportedly told investors that FTX is short as much as $8 billion following a liquidity crisis. The Wall Street Journal cited the same figure, noting that FTX needs a cash infusion to cover customer withdrawal requests.
An FTX representative declined comment to Bloomberg, the publication reported. FTX likewise declined Decrypt's request for comment.
On Tuesday, Binance said that it had signed a non-binding letter of intent to purchase FTX.com amid a liquidity crisis. Today, however, Binance said that it would not follow through, citing the extent of FTX’s financial problems.
“Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said in a statement this afternoon.
FTX had been one of the largest and most visible cryptocurrency exchanges, buoyed by high-profile partnerships with athletes, teams, and sports leagues. The company was valued at $32 billion in January when it raised an additional $1.8 billion.
The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are both now investigating FTX, according to a Bloomberg report, for wrongdoing regarding how it managed customers’ money ahead of the liquidity crunch.