The fears are all but confirmed.
Just now, according to Bloomberg, Sam Bankman-Fried, the CEO and Founder of crypto exchange FTX, has issued a warning to his investors.
The warning was simple: we need more cash or we are going bankrupt.
Bankman-Fried has stated the firm faces a shortfall of cash of up to $8 Billion.
The warning came within hours of the rejected acquisition by rival exchange, Binance. Binance cited issues with finances and regulatory probes as reasons for walking away from the deal.
This comes during what is likely the most tumultuous 48 hours in crypto history which included a number of flip-flopping statements and actions by the two exchanges.
Most recently, Bankman-Fried has announced last-ditch efforts to raise more cash to address their liquidity crisis.
What does this mean for the crypto industry?
Short answer:
probably a lot (for a little while at least)
Long answer:
The effect of the crumbling FTX empire is already being felt across the markets with nearly all cryptocurrencies dropping 15-25% in the last 24 hours.
Because FTX was a major source of funding in the Web3 industry, many expect resulting troubles from early stage companies that have been reliant on FTX lines of credit.
Additionally, FTX has received hundreds of millions of dollars from venture capital firms like Tiger Global and Softbank’s Vision Fund, who will likely be negatively affected by the loss of investment.
Other investors include Sequoia Capital who issued a statement to their investors that they are now valuing their $213.5 Million FTX investment at $0.
This is a developing story and will be published as new information is made public.
