Bahamian cryptocurrency exchange FTX has seen better days than the current state in which it finds itself. With the reality of insolvency that has dawned on the exchange, the FTX Chief Executive Officer (CEO) Sam Bankman-Fried has informed its investors that they may have to file for bankruptcy if they do not get more cash injection to settle the $8 billion shortfall.
SBF issued this warning to FTX investors after the news concerning Binance pulling out of its acquisition went viral. Initially, the world’s largest digital asset exchange by trading volume Binance agreed and signed a non-binding document to acquire FTX in a bid to save the exchange from its liquidity crunch. The final deal was subject to due diligence.
Binance Walks Away From FTX Acquisition Deal
On completion of the corporate due diligence, Binance decided against purchasing FTX. According to the supposed acquirer, results from DD showed that FTX had mishandled customers’ funds and was allegedly currently under United States agency investigations.
“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. Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market,” Binance CEO tweeted.
Before finally concluding that his firm was no longer going through with the acquisition, CZ already sent a message to Binance employees to stop trading the FTX token (FTT).
With all of these going on and no current acquirer available, SBF had to inform investors of the $8 billion shortfall which needed $4 billion to settle and remain solvent.
A few people suspect that FTX is only trying to generate rescue capital in the form of debt, equity, or even a combination of both. On the other hand, Bankman-Fried expressed his frustrations and is asking that investors come to the aid of the exchange.
As it stands, FTT continues to dip with its counterpart BNB slowly plummeting also.