Insolvent crypto exchange FTX requires $8 billion in emergency funding to meet users’ withdrawal requests.
FTX CEO Sam Bankman-Fried disclosed the massive shortfall in a call with investors on Wednesday, the Wall Street Journal reported.
News of the shortfall comes after the exchange halted withdrawals on Wednesday, with some users reporting that the FTX website went down for a brief period.
FTX users were unable to comprehend the scale of user losses, with some having the entirety of their net worth held in their wallet with the exchange.
“I can’t fathom there being no bail out. This can’t be real. You can’t just lose 8 billion dollars of everyone’s money and declare bankruptcy. That’s fucking absurd. This place is going to get extremely dark. Way too many people’s lives have been irreparably ruined,” tweeted crypto trader “gainzy” on Wednesday.
Hopes of recovering funds dwindled further after Binance backed out of a deal to potentially acquire FTX after its corporate due diligence.
A common sentiment among market participants was that, if Binance – the largest player in the crypto space – opted out of a potential acquisition on the grounds that FTX is beyond saving, no one else is likely to step in.
“If CZ, the richest person in crypto, can’t do the deal. No one can do the deal,” tweeted BitMEX co-founder Arthur Hayes.
However, later Wednesday, Justin Sun tweeted, “Further to my announcement to stand behind all Tron token (#TRX , #BTT , #JST, #SUN, #HT) holders on #FTX, we are putting together a solution together with #FTX to initiate a pathway forward.” It was retweeted by Bankman-Fried and the negotiations referenced in a Slack message SBF posted for employees, which was released to Jordan Fish, aka Cobie, and posted to Twitter: “we have had talks with Justin Sun (as Twitter broke).”
Whether Sun would do a few that would benefit all FTX users or just holders of Tron tokens was unclear.
Some industry proponents expect that FTX’s bankruptcy will have lasting consequences for the crypto space – most of which are yet to play out.
“Please remember, the hole in 3AC was only $3.5B, but it was a lot on-chain and collateralized. This hole is $10b on FTX alone, likely more in Alameda, likely owned to big players. This will bleed slowly. Trying to giga long here is going to get you wrecked,” tweeted Adam Cochran, a partner at Cinneamhain Ventures.