© Lam Yik/Bloomberg via Getty Images Sam Bankman-Fried FTX is on the verge of bankruptcy if it does not receive emergency funding. Lam Yik/Bloomberg via Getty Images- According to Bloomberg, FTX CEO Sam Bankman-Fried told investors that the exchange faces an $8 trillion shortfall.
- According to Bloomberg, FTX needs emergency financing or could be on the verge of bankruptcy, Bankman-Fried told investors.
- Binance previously announced plans to acquire FTX, but backed out of the deal.
Sam Bankman-Fried, CEO of struggling cryptocurrency exchange FTX, told investors the company faces bankruptcy if it does not receive emergency funding, Bloomberg reported Thursday, citing a person with direct knowledge of the matter.
FTX has an $8 trillion deficit and is trying to raise $4 trillion to remain solvent, according to Bloomberg.
"I was wrong," Bankman-Fried told investors, according to the publication.
Bankman-Fried's message to investors came just before rival Binance canceled its plan to buy FTX. According to Bloomberg, he repeatedly told investors that Binance would not back out of the deal.
Binance canceled its acquisition plan on Tuesday, citing "issues beyond our control or ability to assist."
But there could be another twist, as Justin Sun, founder of cryptocurrency network Tron, tweeted Wednesday night that he and his team are "working together to find a solution" with FTX. Bankman-Frid retweeted the Sun.
"The current liquidity crisis, despite its short-term nature, negatively affects the development of the industry and investors," Sun added in a Twitter thread. "My team has been working around the clock to prevent further damage."
An odd sequence of events led to the Binance buyout, which began over the weekend with a very public Twitter spat between Bankman-Fried and Binance CEO Changpeng "CZ" Zhao. Ahead of any discussion of the takeover, Zhao tweeted that Binance is liquidating all of its FTT tokens, FTX's native crypto-token, "due to recent revelations."
He did not address their concerns at the time, but a report by CoinDesk on November 2 reinforced market concerns about FTX liquidity.
Then on Monday, Bankman-Fried responded to Zhao by tweeting, "Competitor is trying to challenge her with false rumors," according to media outlets including Bloomberg and Reuters.
But the damage had already been done and the dispute hit market sentiment, prompting a sell-off and rapid retreat. About $6 trillion was withdrawn from FTX in the 72 hours to Tuesday morning, Reuters reported, citing a message to employees from Bankman-Fried.
Bankman-Fried and Zhao appear to have reconciled. The former announced an agreement with Binance, with Zhao saying that Binance had "signed a non-binding letter of intent to fully acquire FTX.com and help manage the liquidity crisis."
The cryptocurrency market did not fare well from the turmoil. Bitcoin and most other cryptocurrencies fell on Wednesday after Binance announced it was pulling out of a deal to take over FTX. According to CoinMarketCap, at 11:48 p.m.
FTX did not immediately respond to an after-hours Insider request.