'I'm sorry, should have done better'։ CEO of cryptocurrency exchange FTX apologizes and seeks $9 billion to save company

November 11, 2022  16:02

The situation around cryptocurrency exchange FTX is getting worse. CEO Sam Bankman-Fried apologized and admitted that he messed up. According to him, FTX will go bankrupt if the company fails to raise more than $9 billion in funds in the near future to resolve its financial problems. At the same time, U.S. law enforcement agencies are investigating the company, while some of its assets have been frozen.

Attempts to save the company

Sam Bankman-Fried told FTX investors about the lack of funding Wednesday before rival exchange Binance dropped its intention to buy FTX. The head of FTX told investors that the company needed $9.4 billion to remain solvent. He also said that he is trying to raise financing himself in the form of a loan or investment, or a combination of both, to save the company.

"I'm sorry. That's the biggest thing. I fucked up, and should have done better," Bankman-Fried wrote on Twitter, telling investors that she would be very grateful if they could help.

Why did FTX face problems?

The cryptocurrency exchange FTX started having problems when its competitor Binance accused FTX of scamming FTT tokens. Binance then began selling those very tokens, and then many others followed suit, causing the prices of those assets to drop from $22 to $14.2.

Users then withdrew more than $6 billion from FTX in about three days, leaving the company already facing a liquidity problem. The FTX crypto-exchange was forced to stop users' withdrawals and sought help from Binance, which initially agreed to take over FTX to save it, but after an audit of the exchange's financial statements, Binance reported that there were a number of problems and the company was pulling out of the deal.

FTX in law enforcement lookout

Because of the problems FTX got under the scrutiny of U.S. regulators, who announced they would launch an investigation to see if there was any possible misuse of FTX customer funds.

According to Bloomberg sources, the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) are interested in the liquidity crisis caused by FTX. According to the agency, the SEC has been inspecting the platforms of FTX US for months. Regulators also want to examine the platform's relationship with FTX US and Alameda Research, which is owned by FTX CEO Sam Bankman-Fried.

Among other things, the Bahamas Securities Commission announced Thursday that it had frozen the assets of FTX Digital Markets, a subsidiary of FTX.

How does all this affect the cryptocurrency markets?

Bitcoin fell 4% to $16,858 on Friday, bringing its losses to 17% this month. The price of the FTT token from FTX fell 27% to $2.7, bringing its loss for the month to 89%.

“Confidence disappeared on the first day of these events, and there is no indication that it will come back,” the head of research at Fore Elite Capital Management, which manages the Hong Kong-based crypto fund, told Reuters.

FTX leader lost 94% of its fortune in one day

These events, which have turned the cryptocurrency market upside down, also affected FTX CEO Sam Bankman-Fried's ability: he lost 94% of his fortune in just one day. According to Bloomberg, Bankman-Fried's $15.6 billion fortune has shrunk to less than a billion.

Sam Bankman-Fried, 30, had a 53% stake in FTX (which equaled $6.2 billion before the troubles began). However, FTX was not Bankman-Fried's most valuable asset: Alameda Research provides him with another $7.4 billion. As a result of recent issues, however, both assets have depreciated and are now valued at $1. Thus, in just one day, Bankman-Fried's fortune dropped from $15.6 billion to $991.5 million, a reduction of nearly 94%.

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