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FTX scrambles for rescue funds
CEO Sam Bankman-Fried is urgently seeking funds to save the cryptocurrency exchange as customers rushed for withdrawals.
FTX is scrambling to raise about $9.4bn from investors and rivals, Reuters has reported citing an unnamed source, as its CEO urgently seeks to save the cryptocurrency exchange after a rescue deal by larger rival Binance collapsed.
Over the past few hours, chief executive Sam Bankman-Fried has discussed raising $1bn each from Justin Sun, the founder of crypto token Tron, rival exchange OKX and stablecoin platform Tether, according to the source who has direct knowledge of the matter, as FTX been buffeted by a rush of customer withdrawals.
He is seeking the remainder from other funds, including current investors in FTX, such as venture capital fund Sequoia Capital, the source added.
It was not clear, however, whether Bankman-Fried will be able to raise the funds he needs and if these investors would participate.
Tether’s chief technology officer, Paolo Ardoino, tweeted that the company had “no plans to invest in or lend assets to FTX”.
One of the 30 to 40 investors in FTX’s data room is Daniel Loeb’s Third Point, but according to a source familiar with the matter, the hedge fund is not discussing giving FTX more money.
FTX and Sequoia did not immediately respond to requests for comment on the latest news of the talks. OKX also was not immediately available for comment on the latest news of talks.
Earlier on Thursday, however, OKX told Reuters it had been approached this week by Bankman-Fried, who described liabilities of $7bn that needed covering fast.
“That was too much for us,” Lennix Lai, director of financial markets at OKX, told Reuters.
In a tweet, FTX said it had reached a deal with Tron to establish a special facility that would allow clients to swap some crypto assets from FTX to external wallets. It said initially that $13m of assets will be deployed to facilitate the swaps.
Earlier in the day, Bankman-Fried said in tweets and a memo to employees seen by Reuters that he was in talks with “a number of players” in the crypto sector, including Sun, after a potential rescue deal with larger rival Binance fell apart.
But he added that he did not want to “imply anything about the odds of success”.
Bankman-Fried also said his trading firm Alameda Research, which sources have said was partly behind FTX’s problems, was winding down trading.