SINGAPORE — 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 has thumped 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. 

Meanwhile, the Securities Commission of the Bahamas said on Thursday it had frozen assets of FTX Digital Markets, an FTX subsidiary. Mr. Bankman-Fried is also under investigation by the US Securities and Exchange Commission for potential securities law violations, according to an unverified Bloomberg reporter tweet. 

Bitcoin tumbled 4% to $16,858 on Friday, with losses totaling 17% this month. FTX’s token FTT was down 27% at $2.7, with 89% losses for the month. 

Trading volumes in bitcoin futures and exchange traded funds have exploded. 

“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. 

“We are already seeing regulators’ actions from US to Japan to Bahamas, etc. Expect more to come and that’s what crypto market needs badly at the moment. People get hurt and need protection.” 

US lawmakers stepped up their calls for action, including new laws to govern the sector and a probe into what led to the FTX collapse. 

With losses widening, more crypto lenders and platforms outlined surging volumes and steps to shield themselves. Crypto lender BlockFi said it was pausing client withdrawals until there was clarity on FTX. 

Broker Genesis Trading disclosed its derivatives business has approximately $175 million in locked funds on FTX. 

“We believe there is a 20–30% chance of a FTX rescue at best,” said Matthew Dibb, chief operating officer of Singapore-based crypto investment manager Stack Funds. 

He noted speculators are paying 10 cents to each dollar to buy trapped deposits on FTX. 

“The damage looks to be done and even if FTX was bailed out, it would no longer be an avenue to trade as they have lost all credibility. 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 Mr. Bankman-Fried after he stepped in to save other crypto firms. Sources told Reuters that FTX transferred at least $4 billion to Alameda, to prop up the trading firm after a series of losses. 


Mr. 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. 

He is seeking the remainder from other funds, including current investors such as Sequoia Capital, the source added. 

It was not clear whether Mr. Bankman-Fried will be able to raise the funds he needs 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. 

The US securities regulator is investigating FTX.com’s handling of customer funds and crypto-lending activities, according to a source with knowledge of the inquiry. — Reuters