FTX CEO Sam Bankman-Fried told investors on Wednesday that FTX.com would file for bankruptcy if it didn't receive cash from investors.
- Cryptocurrency exchange FTX is at risk of bankruptcy due to a reported $8 billion hole in its balance sheet.
- After brief discussions, rival Binance rejected an offer to take over the FTX exchange.
- The prospective failure of FTX sent cryptocurrency prices tumbling as investors and traders weighed the potential fallout.
Liquidity Crisis At FTX
FTX CEO said that the crypto exchange faced a shortfall of up to $8 billion and needed $4 billion to remain solvent. The 30-year-old CEO took to Twitter to apologize and said: ''I'm sorry. That's the biggest thing. I f---d up, and should have done better.'' He clarified that FTX.US, the US-based exchange, is 100% liquid and will not be impacted by the turmoil.
Not long ago, Sam Bankman-Fried's cryptocurrency exchange was seen as a savior in the industry and acquired struggling crypto companies, such as Celsius Network and Voyager. However, now the crypto exchange is on the brink of collapse.
The FTX Meltdown May Affect Giant Firms
There were a number of giant financial institutions that invested in FTX, including BlackRock and the Ontario Teachers' Pension Plan Board. It is possible that these asset managers will be affected by FTX's meltdown. Amid bankruptcy fears, Sequoia Capital has marked down to zero its nearly $210 million investment in cryptocurrency exchange FTX.
The Bottom Line
A report claims FTX has approached crypto exchange Kraken as a potential rescue partner. If FTX can’t keep up, customers and investors may be left with nothing. Amid the chaos, the native token FTT currency has fallen to $3.40, a decline of roughly 85% in the past week.