FTX’s Sam Bankman-Fried is seeking new funds after a deal with Binance collapsed, according to a staff memo on Thursday viewed by Reuters, as the crypto exchange looks to plug a reported $8 billion hole in its finances.
Larger rival Binance walked away from a bailout of FTX on Wednesday, sending cryptocurrency prices plunging as hopes for a rescue diminished.
FTX’s Chief Executive Officer Bankman-Fried told staff in the memo on Thursday that he was seeking a capital raise and had held talks with Justin Sun, founder of the crypto token Tron, although he did not want to imply anything about his chances of success.
In the memo, viewed by Reuters, Bankman-Fried said for the next week he would be “conducting a raise” to do right by customers and “possible new investors.”
It came after Bankman-Fried told employees on Wednesday he was exploring all options for his firm after the Binance deal with collapsed.
A message on the FTX website said that it was no longer processing withdrawals or onboarding new users. TX’s shortfall comes after users rushed to withdraw $6 billion in crypto tokens from FTX in just 72 hours.
Focus among investors is on the unknown size of customer losses and the hit to sentiment from the latest and possibly largest collapse in an industry that has turned into a minefield for investors.
FTX’s native token, FTT is down 90% this week and was attempting to steady around $2.90 – not far above its record low around $1.50. Bitcoin fell below $16,000 for the first time since late 2020 overnight and at 1210 GMT was trading at $16,310, showing little sign of recovery.
Bloomberg reported that Bankman-Fried had told investors that FTX faced a shortfall of up to $8 billion and that the company would need to file for bankruptcy unless it received further funding.