The days of FTX.com are numbered.
The cryptocurrency exchange platform could experience a sad and humiliating fate in the coming hours: filing for Chapter 11 bankruptcy.
The company finds itself with its back to the wall after its rival Binance abruptly decided that it was no longer going to acquire it after opening its books of accounts.
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of http://FTX.com,” the firm said in a message posted on Twitter.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”
FTX Needs $8 Billion
The day before Sam Bankman-Fried, the founder and CEO of FTX, and ChangPeng Zhao had both announced separately that the company of the second would urgently acquire that of the first. The deal was however pending due diligence.
With Binance out of the race, the question now is whether there will be another white knight who will miraculously appear. FTX and Alameda, another trading platform founded by Bankman-Fried, are nearly out of money. It is not certain that they can counter the panic that has taken hold of their customers who want to withdraw their money or at least what is left of it.
Bankman-Fried told investors he met on November 9 that without an injection of fresh money his group would file for bankruptcy, reports Bloomberg News citing unnamed sources.
The 30-year-old boss estimates he needs $8 billion to meet FTX’s obligations. He would like to raise this money in the form of debt, equity, or a combination of the two.
The problem is that FTX has run out of options as investors seem to have lost confidence.
On Nov. 7, Bankman-Fried said his business was doing well and customers had nothing to worry about: “”A competitor is trying to go after us with false rumors,” he said on Twitter. “FTX is fine. Assets are fine.”
But 24 hours later he sold, or tried to sell, the company to Binance, which has now withdrawn from the deal.
“Sad day. Tried, but 😭,” his rival Zhao posted on Twitter after his firm pulled out of the deal.
The FTX debacle has repercussions that affect several spheres including sports. The company, which was valued at $32 billion last February, has signed numerous sports partnerships and welcomed sports stars as shareholders and ambassadors.
Its abrupt downfall leaves the future of those partnerships up in the air. Basketball star Stephen Curry also signed a partnership with FTX in September 2021, which was his first investment in the crypto industry.
Curry’s foundation, Eat.Learn.Play., also partnered with the exchange on charitable initiatives.
Football superstar Tom Brady and model Gisele Bündchen also have an equity stake in FTX. The equity stake was not disclosed, but FTX said they would receive an unspecified amount and type of crypto.
Brady and Bundchen, who recently divorced, have starred in several FTX commercials.