Sam Bankman-Fried. Source: a video screenshot, HBO / YouTubeFTX founder and former CEO Sam Bankman-Fried is working to raise new capital in an effort to make clients whole despite bankruptcy filings.
In a recent Twitter thread, he "meets in person" with potential investors and regulators to do what they can for clients. "And after that, the investors. But first, the customers," she said.
He also provided some context on FTX's sudden crash and how the crypto exchange went from being one of the strongest players in the industry to a €9 billion hole in its balance sheet.
“A few weeks ago, FTX was processing around €10 billion a day in volume and billions in transfers. But there was too much leverage, more than I thought. A bank run and stock market crash have drained the cash So what can I try to do? Increase cash, get customers full and restart," he said.
SBF added that the company currently has less than €8 billion in liquid assets, more than €5.5 billion in semi-liquid assets and an additional €3.5 billion in illiquid assets. So it is trying to raise €9bn to cover the company's €9bn in semi-liquid and illiquid assets for now.
In a separate report, the Wall Street Journal confirmed that SBF was desperately switching from one investor to another in an attempt to raise funds. The report says that efforts to cover this shortfall have so far been unsuccessful.
Speculation about the health of FTX and Alameda increased last week after reports surfaced that the investment firm's balance sheet is stuffed full of FTT tokens, FTX's native token that has fallen more than 90% over the past week.
At the end of the week, FTX announced that it had filed for Chapter 11 bankruptcy in Delaware. Notably, FTX US was also included in the proceedings, despite the former CEO's claims that his US exchange was correct.
Businesses under bankruptcy protection sometimes receive loans to help them maintain their operations. Debtor-in-possession financing means that if the companies survive, the first funds they earn will go toward paying for that lifeline, the WSJ said.
As reported, FTX has lent up to €10 billion in client assets to fund risky bets from its affiliated trading firm, Alameda Research. Since FTX had €16 billion in client assets, the exchange had lent more than half of its client funds.
The recent drama surrounding FTX has set the stage for one of the worst cryptocurrency price declines in the last year. The flagship cryptocurrency was trading around €16,000 last week, a level not seen in two years. The broader crypto market is also down at least 20% in the last 10 days.