Fallen crypto mogul Sam Bankman-Fried is shutting down Alameda Research, the trading house at the heart of his digital-asset empire, as he seeks last-ditch financing to save his troubled crypto exchange FTX.com.
(Bloomberg) — Fallen crypto mogul Sam Bankman-Fried is shutting down Alameda Research, the trading house at the heart of his digital-asset empire, as he seeks last-ditch financing to save his troubled crypto exchange FTX.com.
Bankman-Fried, who on Wednesday told investors that FTX may have to seek bankruptcy if it doesn’t get a rescue, announced the the move in a series of tweets on Thursday, adding that FTX is “spending the week doing everything we can to raise liquidity.”
Bankman-Fried’s downfall was swift, with a hastily-agreed rescue by rival Binance Holdings Ltd.
falling apart, US authorities looking into FTX’s dealings and a prominent investor writing down its stake in the company to zero. Alameda Research was a crucial part of his crypto empire, although questions around its balance sheet had been swirling after an article by CoinDesk earlier this month.
“There is no way that Alameda could operate right now, even if FTX wasn’t in deep trouble,” said Colin Platt, a cryptocurrency consultant.
“It is a business that relies on having the confidence of its counterparties, and confidence in Alameda has been irreparably harmed.”
Read more: FTX Hurtles Toward Bankruptcy With $8 Billion Hole, US Probe
Thursday’s announcement by Bankman-Fried capped a roller-coaster week that saw his creation come apart in a matter of days and sparked a rout in the broader market.
The trouble started on Sunday, when Changpeng “CZ” Zhao, the Binance founder and chief rival, announced plans to sell about $530 million worth of FTT, the native coin of FTX.
FTX saw about $5 billion of withdrawals that day, Bankman-Fried said in his Thursday Twitter thread.
He also miscalculated his sense of “users’ margin” on the platform, he tweeted.
On Tuesday, Zhao and Bankman-Fried both took to Twitter to reveal that they’d reached a tentative deal for Binance to buy FTX.
A day later, Zhao pulled out and Bankman-Fried dropped the bombshell to FTX.com investors that it faced a shortfall of up to $8 billion, according to a person with knowledge of the matter.
FTX is now in the process of trying to raise fresh liquidity, “every penny” of which will go toward making users whole alongside investors, he added.
FTX.US isn’t financially impacted, and is “100% liquid,” he said.
–With assistance from Emily Nicolle and Anna Irrera.
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