"Busy FTX Needs to Secure 13 Trillion Won Funding... Bitcoin Returns to $17,000 Range"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Cryptocurrency exchange FTX, facing a liquidity crisis, is reportedly busy discussing plans to inject nearly 13 trillion won in funds to prevent the company’s bankruptcy. Bitcoin prices, which had plummeted below the $16,000 level the previous day, rebounded to the $17,000 range due to the U.S. Consumer Price Index (CPI) impact that exceeded expectations.

According to major foreign media on the 10th (local time), Sam Bankman-Fried, CEO of FTX, is meeting with investors and representatives of coin companies to request financial support. He has contacted Justin Sun, founder of the blockchain-based digital platform Tron, the cryptocurrency exchange OKX, and stablecoin platform Tether, discussing plans to raise $1 billion from each of these companies. He is also reportedly negotiating bailout plans with venture fund Sequoia Capital and hedge fund Third Point.

The exact amount of funds Bankman-Fried aims to raise is unclear, but the media, citing investors, reports it is expected to be between $6 billion and $9.4 billion (approximately 8.2 trillion to 12.8 trillion won).

In a memo sent to employees, CEO Bankman-Fried said, "I am discussing with various players in the industry," but added, "I do not want to imply anything about the likelihood of success (in fundraising)." He also stated that Alameda Research, an affiliated company that triggered FTX’s liquidity crisis amid suspicions of financial instability, will be shut down.

The Wall Street Journal (WSJ) reported that this week, investors were informed that Alameda owes FTX about $10 billion. FTX had lent funds to Alameda using customer deposits intended for cryptocurrency trading, and Bankman-Fried admitted that this decision was a mistake, according to sources. FTX reportedly held $16 billion in customer assets, about half of which were lent to Alameda.

FTX blocked withdrawals for two days amid a 'bank run' where customers withdrew funds en masse, but Bloomberg News reported that some withdrawals resumed on this day.

Bitcoin, which had been falling without bottoming out, rebounded this day, providing some relief. After falling below the $20,000 mark on the 9th and dropping to the $15,000 range the previous day, Bitcoin rebounded to the $17,000 range. Ethereum rose nearly 9%, FTT, the coin issued by FTX at the center of the liquidity crisis, rose more than 5%, and Solana, which FTX has supported for trading, rose more than 20%.

One foreign media outlet reported, "The FTX issue triggered a larger crisis of confidence in cryptocurrencies, causing Bitcoin prices to fall below $16,000 the previous day, but better-than-expected U.S. inflation data lifted asset markets along with cryptocurrency prices."