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FTX approaches Kraken as potential rescue partner

Nov 10, 2022
Illustration of a tentacle about to shake hands.

Illustration: Aïda Amer/Axios

FTX has approached U.S.-based crypto exchange Kraken about a potential deal as FTX seeks funds after its rapid collapse this week, two sources with knowledge of the matter tell Axios.

Why it matters: FTX and its founder Sam Bankman-Fried are desperate for some kind of rescue package after an earlier agreement with Binance fell apart.

Catch up quick: Binance, the world's largest crypto exchange, backed out of the FTX deal after it took a deeper look inside the company's finances following FTX's liquidity crunch.

  • FTX's outreach to Kraken, a smaller exchange, shows just how thin its options are getting.

Context: It's not only about how much money FTX can raise, but how quickly.

  • In a call with members of its advisory board yesterday, Bankman-Fried told investors that his company could eventually need up to $8 billion to save the business and backstop customer funds, according to one of the sources.

Yes, but: Details of what FTX has in mind with Kraken remain unclear, and like any negotiation, talks could continue or fall apart.

Of note: FTX and Kraken declined to comment. Kraken founder Jesse Powell told Bloomberg on Wednesday that he thinks FTX has some assets that are interesting and have some value.

  • "But I don't think there's going to be value there anything close to what the hole seems to be. So I think the process is likely to go into bankruptcy," he said.
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