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FXT's assets frozen.

 


Regulators froze some assets of distressed cryptocurrency exchange FTX, and industry peers raced to limit losses on Friday amid worsening solvency problems at the firm and heightened scrutiny of its chief executive, Sam Bankman-Fried.

The week-long saga that began with a run on FTX, one of the largest crypto exchanges, and a failed takeover deal by arch-rival Binance have slammed an already struggling bitcoin and other tokens. FTX is scrambling to raise about $9.4 billion from investors and rivals, a source said on Thursday, as the exchange urgently seeks to save itself after a rush of customer withdrawals. As a result, Bitcoin tumbled 4% to $16,858 on Friday, with losses totalling 17% this month. FTX's token FTT was down 27% at $2.7, with 89% monthly losses.

Confidence is gone on day one of this fallout, and there is no sight of it coming back yet,» said Kami Zeng, head of research at Fore Elite Capital Management, a Hong Kong-based crypto fund manager. « to Japan to Bahamas, etc. So expect more to come, and that's what the crypto market needs badly. » The source said helping out FTX was the question for more prominent investors in FTX. SoftBank joins venture capital fund Sequoia Capital which wrote down a $150 million exposure to zero on Wednesday.

With losses mounting, more crypto lenders and platforms outlined surging volumes and steps to shield themselves. For example, Crypto lender BlockFi said it was pausing client withdrawals until there was clarity on FTX. « A rescue of FTX would not be for the company, but for the clients and crypto ecosystem». The seeds of FTX's downfall were sown months earlier in mistakes made by Bankman-Fried after he stepped in to save other crypto firms.

Sources said that FTX transferred at least $4 billion to Alameda to prop up the trading firm after a series of losses. Bankman-Fried has discussed raising $1 billion each from Justin Sun, the founder of crypto token Tron, rival exchange OKX and stablecoin platform Tether, according to the source who has direct knowledge of the matter. The source added that he is seeking the remainder from other funds, including current investors such as Sequoia Capital. It was unclear whether Bankman-Fried would be able to raise the funds he needed or if these investors would participate.

FTX's predicament marks a stunning downfall for the 30-year-old crypto executive who was once worth nearly $17 billion.

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