According to a report shared by an FTX staff member, prior to Binance announcing it would acquire the exchange, CEO Sam Bankman-Fried explained that in 72 hours FTX saw roughly $6 billion in withdrawals. Furthermore, the staff member’s account notes that withdrawals on the exchange FTX.com were “effectively paused.”
It’s been a crazy day in the world of crypto as Binance, the largest exchange in terms of digital currency trade volume, has said it is set to acquire the crypto trading platform FTX. Furthermore, FTX CEO Sam Bankman-Fried confirmed the transaction would take place and said the details involving the deal would be revealed in the future.
When Binance’s CEO Changpeng Zhao (CZ) told the public Binance would acquire FTX, the executive mentioned a “significant liquidity crunch.” Wall Street Journal (WSJ) reporter Liz Hoffman explained that her sources detailed that FTX was “canvassing deep pockets in Silicon Valley and Wall St” this a.m. “before securing an emergency lifeline from rival Binance.”
Hoffman’s sources said two people detailed FTX was seeking more than $1 billion. “Those [people] said it looked like a classic run on the bank: panicky investors pulling money out of FTX faster than it could sell assets to produce the cash. One person briefed on the fundraising blitz said what started as a $1bn ask was looking more like $5bn-$6bn by midday,” Hoffman added.
The news outlet Reuters has seen an alleged conversation between Bankman-Fried and FTX staff, according to a report published on Tuesday. The Reuters report explains that the message shows Bankman-Fried told employees it was seeing a massive influx of withdrawals. “On an average day, we have tens of millions of dollars of net in/outflows. Things were mostly average until this weekend, a few days ago,” the FTX CEO is quoted as saying.
Bankman-Fried reportedly added:
In the last 72 hours, we’ve had roughly $6b of net withdrawals from FTX.
The Reuters report further says that employees were told withdrawals on the exchange FTX.com were “effectively paused,” and that more details would be released in “the near future.” “Most of the details [of the deal] still aren’t hashed out,” Bankman-Fried ostensibly remarked. While the crypto economy initially dipped when speculation concerning FTX was heightened before the acquisition, a number of leading crypto assets rebounded after CZ revealed the news.
The crypto economy healing did not last long, and after more reports came out concerning FTX’s affairs, the news seems to have frightened investors. BTC dropped 14.6% in 24 hours and ethereum (ETH) shed 19.8% against the U.S. dollar dropping under $1,300 per ether. Both coins have managed to rebound a hair, as BTC is now down 12.5% and ETH is down 17% against the greenback.