As the crypto exchange struggles to survive, the Bahamas regulator has blocked FTX assets

Investors describe Sam Bankman-Fried's chaotic race to secure up to $8 billion to bail out his organization.

As Sam Bankman-Fried scrambled to fund as much as $8 billion to preserve FTX, the Bahamas securities regulator seized the assets of a portion of his crypto empire and sought to appoint a liquidator for one of his firms.

The Bahamian subsidiary of FTX, FTX Digital Markets, was the target of the action on Thursday by the Securities Commission of The Bahamas. According to the regulation, no business assets may be transferred without a temporary liquidator's consent. In 2021, FTX relocated to the Bahamas from Hong Kong, where it was first established.

The notification stated, "The commission is aware of public remarks indicating that client assets may have been mishandled, mismanaged, and/or moved to Alameda Research." Bankman-cryptocurrency Fried's trading company in Alameda.

As several of his former investors wrote down their stakes in FTX on Thursday, Bankman-Fried was attempting to raise as much as $8 billion to revive his cryptocurrency startup.

The issue has a ripple effect in the cryptocurrency market, and BlockFi, a platform for lending digital assets, halted customer withdrawals as a result.

BlockFi stated on Thursday that the "lack of certainty about the status" of FTX and Alameda prevented it from conducting business as usual. The FTX CEO had backed out BlockFi with a $250 million loan during a cryptocurrency market collapse this year.

The 30-year-old acknowledged through Twitter that there wasn't enough easily available cash on the FTX trading platform to fulfill client needs. Investors recalled the humbling crypto CEO's frenzied appeal to close his company's financial gap.

In light of growing skepticism over FTX's capacity to survive without a capital infusion and concern for clients who have money locked on the frozen exchange, the outcome of Bankman-race Fried's for cash will determine the destiny of the company.

The fact that FTX US, which is independent of the international exchange, warned it would stop trading on its platform in the coming days is a reflection of how tensions are growing among firms connected to him.

On Friday, FTX's Australian operation was put into administration. Customers were urged not to make any transactions or deposits. Japan required the local affiliate of FTX to halt part of its operations.

Investors believe Bankman-Fried is requesting $6 billion to $8 billion. His trading company, Alameda Research, owes FTX $10 billion, according to two persons with knowledge of the situation.

A number of investors have reduced their ownership holdings in FTX to zero, including venture capital company Sequoia and Paradigm, which each had $300 million invested.

One of the investors said that Bankman-Fried planned to use Tron founder Justin Sun, stablecoin operator Tether, and cryptocurrency exchange OKX for the financing.

The Financial Times quoted Paolo Ardoino, the chief technical officer of Tether, as saying, "We were asked whether we were interested in investing or lending money. We refused. Prior to the announcement of the failed Binance bailout, he claimed that Bankman-Fried had contacted him a few days before to request assistance from the stablecoin issuer.

A request for comment was not answered by Sun, although the company has stated on Twitter that "we are working with FTX to put together a solution to start a route ahead."

On Thursday, FTX said that it had achieved a deal with Tron to create a "unique facility" that would let owners of particular crypto tokens exchange assets one-to-one from FTX to outside wallets.

According to those acquainted with the situation, OKX rejected an exclusive contract to bail out FTX on Tuesday but is still debating whether to invest cash. The danger of client litigation and the chance that FTX misappropriated consumer money worry its management.

People familiar with the situation said that investors and clients have approached renowned American litigator David Boies about filing a lawsuit. In the meantime, Martin Flumenbaum, a partner at Paul Weiss, has been hired by Bankman-Fried. Flumenbaum is well-known for having defended junk bond trader Michael Milken, who was imprisoned for breaking US security laws before being pardoned.

Boies declined to respond to a request for comment, and Flumenbaum did not immediately answer.

Less than a month ago, FTX was prepared to conduct a series C capital round matching its $32 billion value from January. This attempt to raise money is taking place now.

Investor: Bankman-Fried looked to be leading the financial rescue effort without outside counsel, according to Investor. "It appears that he is handling this procedure all by himself via text messaging. The investor said, "He doesn't have a guy.

Bankman-Fried attributed an incorrect accounting of leverage and liquidity on the market to shoddy internal record keeping. He wrote, "I'm sorry. I screwed up.

He offered to resign as CEO if the company survived and promised that current assets and any money raised would be used first to pay back customers.

We are in negotiations with a number of players, according to Bankman-Fried. "Let's see how that turns out,"

reporting by Ortenca Aliaj in New York, Kadhim Shubber in London, Arash Massoudi, Joshua Oliver, and Scott Chipolina in San Francisco, and Richard Waters and Tabby Kinder in New York. William Langley Chan Ho-him in Hong Kong, James Fontanella-Khan in New York, and Nic Fildes in Sydney contributed additional reporting.

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