FTX Scrambles For Funds As Regulators Take Action, Worsening Solvency Troubles For The Firm
Regulators froze some assets of distressed crypto exchange FTX
Regulators froze some assets of distressed cryptocurrency exchange FTX and industry peers raced to limit losses on Friday amid worsening solvency problems at the firm and heightened scrutiny of its chief executive, Sam Bankman-Fried.
The week-long saga that began with a run on FTX, one of the largest crypto exchanges, and a failed takeover deal by arch-rival Binance has thumped an already struggling bitcoin and other tokens.
FTX is scrambling to raise about $9.4 billion from investors and rivals, a source said on Thursday, as the exchange urgently seeks to save itself after a rush of customer withdrawals.
Meanwhile, the Securities Commission Of the Bahamas said on Thursday it had frozen assets of FTX Digital Markets, an FTX subsidiary. Bankman-Fried is also under investigation by the US Securities and Exchange Commission for potential securities law violations, according to an unverified Bloomberg reporter tweet.
Bitcoin tumbled 4 per cent to $16,858 on Friday, with losses totalling 17 per cent this month. FTX's token FTT was down 27 per cent at $2.7, with 89% losses for the month.
Trading volumes in bitcoin futures and exchange traded funds have exploded.
"Confidence is gone on day one of this fallout and there is no sight of it coming back yet," said Kami Zeng, head of research at Fore Elite Capital Management, a Hong Kong-based crypto fund manager.
"We are already seeing regulators' actions from US to Japan to Bahamas, etc. Expect more to come and that's what crypto market needs badly at the moment. People get hurt and need protection."
US lawmakers stepped up their calls for action, including new laws to govern the sector and a probe into what led to the FTX
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