FTX Turns to Apollo in Latest Rescue Offer

FTX Turns to Apollo in Latest Rescue Offer

In Sam Bankman-Fried's latest Hail Mary to save his cryptocurrency exchange FTX, the under-fire former billionaire has turned to private equity powerhouse Apollo Global, according to three sources familiar with the matter.

There is no sign the attempted rescue funding package has moved forward, the sources said - as Bankman-Fried has exhausted many options and appears to have few alternatives.

The emergency investment — which could take the form of a debt-to-equity conversion, a high-interest debt revolver or an outright stock purchase — would likely only be palatable to Apollo and other large institutional investors in a consortium model. Sources said any investor going it alone, regardless of the dry powder on hand, would pose outsized risk.

Any potential deal would almost certainly provide a boost to FTX.US, the exchange's U.S. arm, which has been profitable in the past and is on a solid growth trajectory. Rival Binance, FTX's original suitor, suddenly pulled the plug on its own business to acquire FTX outright.

A spokesperson for Apollo declined to comment, as did a spokesperson for FTX. The sources were granted anonymity to discuss sensitive business relationships.

That acquisition, pending due diligence and final terms, fell apart as U.S. regulatory scrutiny increased. Binance CEO Changpeng “CZ” Zhao balked at the prospect of buying floundering, liquidity-starved FTX without involving its U.S.-based counterpart, sources said.

FTX rescue options

Bankman-Fried's attempts to salvage this bailout appear to have been largely unsuccessful so far, as deep-pocketed asset managers weigh the likelihood of a regulatory crackdown and continue to analyze the collapse of the exchange's native token, FTT.

The cost of the rescue would be significant, with two sources putting the figure at between $5 billion and $10 billion. Reuters reported An FTX push is in the works to somehow raise $9.4 billion, including funding from Dan Loeb's Third Point and Justin Sun.

Blue-chip investment banks have also fielded inbound calls from FTX and intermediaries working on behalf of the exchange, all three sources said. But this seems to be a non-starter so far.

“I feel like it would be a big [private equity] shop,” one source said. “I don’t think the banks would ever stick their neck out for something like that.”

But what would all supporters actually purchase? Possibly FTX's tech stack and staff - but there would be questions about the value of its assets and customer base, both of which have fallen hourly since the Binance deal was taken off the table.

Even for $1, the price CZ offered to buy the entire company, the various headaches of debt and regulatory issues might be too much to bear.

“There’s no point in buying a burning pile of trash,” a source said.

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The post FTX Turns to Apollo in Latest Bailout Bid is not financial advice.