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FTX needs $4 billion to avoid declaring bankruptcy

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The FTX stock exchange would need a capital injection of at least $4 billion to remain solvent. The capital was required from shareholders, failing which the company would be declared bankrupt.

Sam Bankman-Fried, CEO of FTX
Image of FTX CEO Sam Bankman-Fried.

On Wednesday, FTX CEO Sam Bankman-Fried held a phone call with the platform’s major shareholders to update them on the state of the exchange. Bankman-Fried was clear that if he did not obtain a capital injection from an outside party, the company would have to file for bankruptcy.

During the call, Bankman-Fried reported that the platform is facing a deficit of nearly $8 billion and that at least $4 billion is needed to remain solvent.. FTX would be exploring several possibilities to raise funds, such as: purchase of debt, equity or a combination of both.

In search of a solution, Bankman-Fried turned to investors for help, saying he would be “incredibly, incredibly grateful” if they agreed. FTX boasts a long and well-known list of investors, including: Sequoia Capital, BlackRock Inc, Tiger Global Management and SoftBank Group Corp. None of these entities has so far agreed to finance FTX. In the case of Sequoia Capital, it has written down the full value of its holdings in FTX, which may indicate that the company does not see a clear path to recover its investment.

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The meeting took place a few hours earlier Binance decided not to proceed with the purchase of 100% of FTX.a move that Bankman-Fried himself had assured would take place. During the meeting, on several occasions the FTX CEO made comments such as “…..it is not true that Changpeng Zhao has given up the acquisition.“. Shortly thereafter the meeting ended, Binance announced that it was withdrawing its offer due to its inability to withstand the dire financial state FTX is in..

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Because of the unsustainable situation, a few hours ago FTX decided to suspend registrations of new users on its platform.. The decision was made after receiving a barrage of criticism that the platform continued to allow registration of new users despite having liquidity problems. The move comes on top of the suspension of withdrawals, which was partially implemented on Monday..

Bitcoin.com will continue to report new news related to FTX and the market situation in general. In the meantime, you can continue to read about the 11,000 workers laid off by META in recent hours..

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