SBF not giving up, looks to raise fresh capital despite bankruptcy
Sam Bankman-Fried (the former leader of FTX) seems to be still looking for alternative funding sources in a desperate attempt to resurrect the debt-ridden FTX cryptocurrency exchange. Even though the exchange and its 134 affiliate companies filed for Chapter 11 bankruptcy protection last Wednesday, a few loyal members may still be trying salvage the wreckage. This leaves the majority of staff without employment.
SBF NotYet Ready to Give Up?
According to a report Bankman-Fried spent the weekend in the Bahamas with a few other employees. They called potential investors to ask for commitments to pay the $8 billion shortfall. This was in the hope of repaying FTX’s stranded clients.
The FTX Hack Fiasco
Currently, more than 100,000 creditors are involved in FTX’s bankruptcy proceedings. The majority of these are trading clients whose funds have been frozen. A hack of FTX’s operational wallets on November 12 led to the theft of $477million worth of cryptocurrency.
Read More: Kraken’s CSO Claims to Have Identified FTX Hacker
It is not common for a business after declaring bankruptcy to seek out new equity capital. FTX might use a process called “debtor-in-possession financing”, which requires court approval, to obtain a loan that would allow the company to continue operating.
In Sam’s case, however, the funds were intended to compensate traders and institutional clients who were unable to withdraw funds. They also support limited staff members to keep the company operating.
FTX on a Death Spiral?
According to reports, FTX financed Alameda Research (an affiliated trading firm), billions of dollars in customer assets to finance risky trades. Bankman-Fried advised investors last week that he needed emergency funding to cover an $8 billion shortfall due to withdrawal requests.
Read More: Against $8bn In Liabilities FTX Holds Less Than $1bn In Liquid Assets
It was also reported that nearly $1 billion in client deposits went missing from the bankrupt cryptocurrency exchange FTX. Furthermore, it is alleged that Bankman-Fried used a ‘backdoor’ in FTX’s book-keeping system in order to siphon off private money.
The Bahamas Securities Commission announced Monday that two PwC provisional Liquidators were appointed by the Supreme Court to handle the case.
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