The crypto exchange FTX is bankrupt and many customers fear for their money. Founder Bankman-Fried has resigned from his position as CEO. Rumor has it that the 30-year-old is phoning potential investors in the background to plug the platform's billion-dollar hole.
The founder of the crypto exchange FTX is apparently trying to collect fresh money from investors a few days after the company's bankruptcy. Sam Bankman-Fried, along with a few remaining employees, spent the weekend calling potential investors to fill a capital shortfall of up to $8 billion, people familiar with the matter said. So far, attempts to close the gap have not been successful.
It was not known what Bankman-Fried was offering in return or if he had received any promises. FTX filed for bankruptcy on Friday, and the 30-year-old resigned as CEO. However, he is still the largest shareholder. In the days leading up to the application, he had sensed that the company was doing well. The tweets have since been deleted.
FTX has reportedly funded billions of dollars in risky bets from affiliate trading firm Alameda Research with customer funds. Bankman-Fried told investors last week that he needed funds to replace up to $8 billion in missing capital.
The bankruptcy filing caught many customers off guard. Up to a million customers could be affected by the collapse. FTX is currently in contact with federal and state regulators, court documents said. Newly appointed CEO John J. Ray III is working to secure customer and company assets worldwide. Trading and withdrawal functions have been stopped.
The turbulence on the cryptocurrency market is also calling the US Federal Reserve into action. Michael Barr, the Fed's deputy chairman for banking supervision, apparently wants to recommend stricter measures to Congress. Barr will tell the Senate Banking Committee Wednesday, according to his keynote, that crypto activities need to be regulated in a similar way to traditional financial services.
While most crypto activity takes place "outside the realm of banking regulation," that could change over time. "Recent events remind us of the potential for systemic risk as interconnections develop between today's cryptosystem and the traditional financial system," Barr will say, according to the speech.
