FTX, the teetering crypto exchange fronted by Sam Bankman-Fried, could be forced to close its U.S. operations in the coming days amid mounting pressures on its finances and the possible bankruptcy of its global business, the group warned late Thursday.
Internal memos show the FTX's legal counsel Ryne Miller has warned employees that, while the group is working with advisers to form a plan to address the reported $9.4 billion hole in its finances, 'we should not be optimistic for an outcome that is positive." The group has also warned that trading could be halted "in the coming days".
The spillover in broader crypto markets continues, as well, with troubled digital lender BlockFi -- which was given $400 million in credit assistance earlier this year by FTX itself -- suspending operations and Bankman-Fried saying he will close the Alameda Research division that he owns. The Securities and Exchange Commission of the Bahamas has also frozen the assets of FTX subsidiary FTX digital.
In Europe, officials in Cyprus are reportedly ready to suspend FTX's trading license -- which provides a 'passport' for its operations throughout the world's biggest economic bloc -- as early as today.
Elsewhere, the Mercedes Formula One team, backed by the German automaker Daimler AG, suspended its sponsorship deal with FTX it signed in September of last year.
Officials in Miami-Dade county, where FTX signed a $90 million naming rights deal for the home arena of the NBA's Miami Heat, told Bloomberg Thursday it would look to "all legal remedies" if future payments were to fail.
Bankman-Fried, meanwhile, is scrambling to both find an investor, or a group of investors, willing to provide the estimated $8 billion to $10 billion to save his flailing operations and provide some form of liquidity to users trapped inside FTX's myriad trading platforms.
Bitcoin prices resumed their recent slide, falling 1.5% in overnight trading to around $17,375 each, well ahead of the two-year low of $15,632 that was printed earlier this week.
Still, on this day last year, the world's biggest cryptocurrency was trading at around $64,400 each.
FTX began to wobble earlier this week following a weekend Tweet from Changpeng Zhao, CEO of its larger rival, Binance, which indicated the Dubai-based exchange would sell the bulk of its $500 million in FTT -- the utility token issued by FTX -- due to what he called "recent revelations that have come to light".
That might have been a reference to an early November report from the crypto-focused news website CoinDesk reported that Alameda Research, another digital asset firm owned by Bankman-Fried, held most of its $14.6 billion in assets in the FTT coin, citing leaked company financials. Group CEO Caroline Ellison disputed the report, noting in a Tweet that "that specific balance sheet is for a subset of our corporate entities, we have > $10b of assets that aren’t reflected there."
Binance then offered a financial rescue of FTX, but quickly rescinded it amid what Zhao described as liquidity issues "beyond our control or ability to help."
FTX's utility token, FTT, was last seen 41.1% lower on the day at $2.61 each, a more than 95% plunge from the highs it reached earlier this month.
