Binance backs out of rescue deal, FTX.com on brink of collapse- QHN

Sam Bankman-Fried told FTX.com investors Wednesday that without a cash injection the company would need to file for bankruptcy, according to a person with direct knowledge of the matter. On a call before Binance pulled an about-face and bailed on its takeover offer, Bankman-Fried informed investors his crypto exchange faced a shortfall of up to $8 billion and needed $4 billion to remain solvent, the person said, asking not to be named discussing private talks. FTX is attempting to raise rescue financing in the form of debt, equity, or a combination of the two, the person said. “I f—ed up,” Bankman-Fried told investors on the call, according to people with knowledge of the conversation. He said he would be “incredibly, unbelievably grateful” if investors could help. An FTX representative declined to comment. The acknowledgment of his firm’s deepening troubles and limited options is a stunning turn for the crypto industry’s onetime wunderkind, who was once worth $26 billion and likened to John Pierpont Morgan. It also underscores the uncertainty hanging over FTX, its clients and cryptocurrency markets. Hanging in the balance as the exchange teeters is not just the fate of its investors and lenders but anyone who has been unable to retrieve customer assets since it halted some withdrawals earlier in the week. The failure of crypto firms Celsius and Voyager saw billions in client money tied up in bankruptcy proceedings. FTX has a prominent list of backers such as Sequoia Capital, BlackRock, Tiger Global Management and SoftBank Group Corp.

Sequoia wrote down the full value of its holdings in FTX.com and FTX.us, an indication that the firm sees no clear path to recouping its investment. Still, Bankman-Fried remained defiant during a hectic period of roughly 24 hours that included mounting speculation that Binance wouldn’t go through with the deal. He repeatedly told investors during the conference call on Wednesday afternoon that it was simply not true that Changpeng Zhao was walking away from the takeover, the person said. About an hour later, Binance said it was indeed backing out. Sequoia Capital wrote down the full value of its holdings in FTX, a signal the venture capital firm sees no clear path to recouping its investment in the embattled cryptocurrency exchange. The VC firm put in about $214 million last year in FTX’s international and US businesses, Sequoia told its investors Wednesday. The writedown includes holdings of both FTX.com and FTX.us, said a spokeswoman for the firm. “We are in the business of taking risk,” Sequoia wrote in a message to investors. “Some investments will surprise to the upside, and some will surprise to the downside.” Sequoia is among several prominent backers that stand to lose big on their holdings of Sam Bankman-Fried’s FTX. Others include BlackRock, Tiger Global Management and SoftBank Group.

Sea of Red: Crypto markets nurse heavy losses Cryptocurrency markets nursed heavy losses on Thursday, with bitcoin hovering near a two-year low as investors fretted about the fallout from the implosion of crypto exchange FTX, which was seeking new funds to plug a gaping 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 native token, FTT is down 90 per cent this week and was attempting to steady around $2 — not far above its record low around $1.50. Bitcoin fell below $16,000 for the first time since late 2020 overnight and was last at $16,700. “Even Elon Musk would not be able to commit to a deal with $7 billion liability within a few hours of negotiations. That was too much for us,” Lennix Lai, director of financial markets at OKX told Reuters. “(It) is a big hole to plug,” he added. “The dagger will continue to hang over the crypto market, as long as the outlook of FTX’s fate remains unclear.” BLOOMBERG