FTX Turns to Apollo in Latest Bailout Bid

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

There are no indications the attempted rescue finance package moved forward.

Sources said any one investor going it alone, irrespective of dry powder on hand, would represent outsized risk. 

Any potential deal for any large institutional player would almost certainly make a push for FTX.US, the exchange’s US arm that has historically been profitable and on a solid growth trajectory. Rival Binance, FTX’s original suitor, suddenly pulled the plug on its own deal to acquire FTX outright. 

A spokesperson for Apollo declined to comment, as did a spokesperson for FTX. Sources were granted anonymity to discuss sensitive business dealings. 

That acquisition, which had been pending due diligence and finalizing terms, fell apart as US regulatory scrutiny mounted. Binance CEO Changpeng “CZ” Zhao balked at the prospect of purchasing the flailing, liquidity-starved FTX without the inclusion of its US-based counterpart, sources said.

FTX bailout options

Bankman-Fried’s attempts to salvage that rescue package so far appear to have been largely unsuccessful as deep-pocketed asset managers weigh the likelihood of a regulatory crackdown and continue to parse the collapse of the exchange’s native token, FTT.

The cost of the rescue would be hefty, with two sources pegging the figure between $5 and $10 billion. Reuters reported an FTX push is in the works to somehow rustle up $9.4 billion, including funding from Dan Loeb’s Third Point and Justin Sun.

Blue-chip investment banks have also fielded incoming calls from FTX and intermediaries working on the exchange’s behalf, all three sources said. But that, so far, appears to be a non-starter. 

“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 there for something like this.”

But what would any backers be acquiring, anyway? FTX’s tech stack and personnel, potentially — but there would be questions over the value of its assets and customer base, both of which have been plummeting by the hour ever since the Binance deal was taken off the table. 

Even for $1, the price CZ offered to purchase the entire operation, the assorted headaches of debt and regulatory issues might be too high a burden to bear. 

“Doesn’t make sense to buy a flaming pile of trash,” a source said.

Updated, November 10 1:37pm ET: Clarified that there is no indication that Apollo has engaged in rescue financing or intends to do so.

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  • Michael Bodley
    Michael Bodley

    Managing Editor

    Michael Bodley is a New York-based managing editor for Blockworks, where he focuses on the intersection of Wall Street and digital assets. He previously worked for the institutional investor newsletter Hedge Fund Alert. His work has been published in The Boston Globe, NBC News, The San Francisco Chronicle and The Washington Post.

    Contact Michael via email at [email protected]

Source: https://blockworks.co/news/ftx-turns-to-apollo-in-latest-bailout-bid/