A troubled cryptocurrency exchange, FTX has opted to raise capital to fill a shortfall as large as $8 billion in its finances. Reuters reports that the exchange will conduct its fundraising next week.
This is even as rival crypto exchange Binance bailed out of a non-binding agreement to take over the former's non-US operations on Wednesday. The development comes a day after the Founder and CEO, Sam Bankman-Fried told investors during a call that he was hoping FTX could raise between $3 billion and $4 billion in equity and debt to cover the shortfall.
In a memo seen by Reuters, Bankman-Fried told staff members that he had a discussion on the matter with Justin Sun, the Founder of the blockchain, Tron and the cryptocurrency token, Tronix. Meanwhile, Sun tweeted early on Thursday that his firm was "putting together a solution" for FTX. The goal is to "initiate a pathway forward" for the exchange, he said.
In a series of tweets later on Thursday, Bankman-Fried also noted that he and his team were “doing everything we can to raise liquidity”.
Alameda Research
Also, Bankman-Fried in his tweet on Thursday disclosed that FTX’s corporate sibling Alameda Research is gradually drawing its trading activities to a close. The subsidiary, which is based in Hong Kong, is a quantitative cryptocurrency trading firm that provides liquidity to digital assets markets.
This is even as a recent review of a private document by CoinDesk showed that Alameda Research's balance sheet is full of FTX tokens (FTT), suggesting stronger ties to FTX. This likely explains why the subsidiary of the Bahamas-based cryptocurrency exchange intends to wind down its trading activities.
As of June 30, Alameda Research’s assets totalled around $14.6 billion with “unlocked FTT tokens” accounting for 25% or $3.66 million, the firm’s single biggest asset. Furthermore, CoinDesk’s review found that 15% or $2.16 billion of Alameda Research’s assets was held in “FTT collateral.”
On the liability side, the outlet found that loans accounted for 92.5% of the trading firm’s $8 billion of liabilities, amounting to $7.4 billion of loans. Again, of the total liability, $292 million was in “locked FTT.”
