SBF Not Giving Up, Looks to Raise Fresh Capital Despite Bankruptcy
Sam Bankman-Fried, the former leader of FTX, seems to still be looking for alternate funding sources in a dire attempt to resurrect his debt-ridden FTX crypto exchange. A few loyal members may still be trying to salvage the debris even though the exchange and its 134 associate companies filed for Chapter 11 bankruptcy protection last week, leaving the majority of staff without jobs.
SBF NotYet Ready To Give Up?
According to a report, Bankman-Fried, along with a few of the remaining employees, spent the last weekend in the Bahamas, calling potential investors in search of commitments to cover the infamous $8 billion shortfall in the hopes of repaying FTX’s stranded customers.
The FTX Hack Fiasco
More than 100,000 creditors are currently involved in FTX’s bankruptcy proceedings, the majority of which are trading clients whose funds are currently frozen. To make matters worse, a hack of FTX’s operational wallets on November 12 resulted in the theft of $477 million worth of cryptocurrency that was still on the exchange.
Read More: Kraken’s CSO Claims To Have Identified FTX Hacker
It is unusual for a business to look for new equity capital soon after declaring bankruptcy. But, a process called “debtor in possession financing”, which needs court approval might be used by FTX to obtain a loan that would let the company continue running.
However, in Sam’s situation, the funds are intended to compensate individual traders and institutional clients who have been unable to withdraw funds instead of supporting limited staff to keep the company operational.
FTX On A Death Spiral?
According to the reports, FTX financed Alameda Research, its affiliated trading firm, billions of dollars worth of customer assets to finance risky trades, paving the way for its sudden collapse. Last week, Bankman-Fried informed investors that he required emergency funding to fill an $8 billion shortfall caused by withdrawal requests.
Read More: Against $8bn In Liabilities FTX Holds Less Than $1bn In Liquid Assets
It was also reported that almost $1 billion in client deposits have gone missing from the bankrupt cryptocurrency exchange FTX, and it’s alleged that Bankman-Fried used a “backdoor” in FTX’s book-keeping system to siphon off money privately.
On Monday, the Bahamas Securities Commission announced that the Supreme Court had appointed two PwC provisional liquidators to the case.
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