According to The Wall Street Journal, Sam Bankman-Fried's trading firm owes FTX $10 billion after taking loans from its customers.
FTX shouldn't be investing customers' money according to an economist. There shouldn't be anything done with those assets. The people should be sitting there so they can use them. That is especially true for markets where the value of the asset can change in a day or two.
FTX lent over half of its customer funds to Alameda, which used them to bet on other Cryptocurrencies and help out other firms in the market.
The balance sheet of Alameda was called into question by an article that said that a lot of it was made up of the exchange's token. That turned into a real problem when Changpeng Zhao announced that he was going to sell billions of FTT, which sent the value of thecryptocurrencies into a tailspin. FTX has been struggling to stay afloat, with its customers trying to withdraw funds, amid fears over just this kind of risky financial arrangement between FTX and Alameda. Some successful withdrawals were processed by FTX on Thursday, but who was able to get funds is still unknown.
FTX is attempting to raise $9.4 billion to repay customers.
Sam Bankman-Fried apologized this morning, saying that he should have done better. He didn't directly address whether Alameda had been using FTX customer funds, but he did say that the firm is winding down trading.
The future of FTX is uncertain at the moment. It was announced this week that the largest exchange would buy the firm to make sure customers get their money back. Issues are beyond our control or ability to help, so it returned the offer the next day. Bankman- Fried is trying to raise $9.4 billion from various investors for an FTX rescue package. Bankman-Fried said that every penny of the money raised would go to customers.
The domestic exchange operates as a separate entity from the FTX.com exchange, and Bankman- Fried promised that FTX.us users are fine. There is a warning on the FTX.us site that trading may be halted in a few days. "Withdrawals are and will remain open," it says.
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