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FTX fundraising: Can crypto golden boy Sam Bankman-Fried raise $4bn to save his crumbling empire?

By Darius McQuaid

16:06, 10 November 2022

Sam Bankman-Fried, CEO of FTX, testifies during the House Agriculture Committee hearing titled Changing Market Roles: The FTX Proposal and Trends in New Clearinghouse Models, in Longworth Building on, 12 May, 2022
Sam Bankman-Fried, founder and CEO of FTX said: “I sincerely apologise” – Photo: Getty Images

As British Prime Minister Harold Wilson once said, “A week is a long time in politics”. The same can be said for crypto.

It wasn’t long ago that Sam Bankman-Fried, founder and CEO of cryptocurrency derivatives exchange FTX, was seen as an influential figure in the crypto industry.

As of 10 November 2022, FTX is facing bankruptcy due to a “significant liquidity crunch”.

Bankman-Fried says the company has a shortfall of $8bn (£7.02bn) but needs $4bn (£3.5bn) to remain solvent, an FTX investor told Bloomberg.

BTC to USD 

What are the options on the table?

Binance, the world’s largest cryptocurrency exchange by trading volume, pulled out of its bailout deal with FTX on 9 November.

This has left FTX in a position where bankruptcy is very possible, to such an extent that Bankman-Fried said via Twitter: “I fu*ked up and should have done better.”

However, the FTX CEO has been offered a potential lifeline from Justin Sun, the founder of Tron (TRX).  

DOGE/USD

0.12 Price
-2.150% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

BTC/USD

64,486.25 Price
-0.390% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.62 Price
+5.720% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BCH/USD

376.70 Price
-3.000% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

Sun said that he wishes to stand behind all TRX and Huobi Token (HT) holders on FTX and is ”putting together a solution with FTX to initiate a pathway forward”.   

He added that “the ongoing liquidity crunch, despite [being] short term in nature, is harmful to industry development and investors alike”.

Sun said that “ark building is well under way, the modern crypto voyage for FTX users to weather the crypto storm”. Tron is waiting on “standby” and has support from crypto exchange Huobi in this mission.

Bankman-Fried also said: “There are a number of players who we are in talks with. We’ll see how that ends up.”

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‘So, what does this mean going forward?’

The FTX CEO asked the question “So, what does this mean going forward?” To which his response was “I’m not sure”.

He was certain, however, that Alameda Research, the quantitative crypto trading firm that he founded, would “wind down trading”.

Regardless, a priority for the FTX CEO is doing right by the customers, and he ended his series of tweets with “I sincerely apologise”.

Markets in this article

TRX/USD
TRON / USD
0.13657 USD
0.00042 +0.310%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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