FTX Looks To Kraken For Help, But Jesse Powell Sees Red Flags

Even as cryptocurrency exchange FTX struggles to stabilize its financial woes, the company has reportedly reached out to its rival exchange Kraken, with a “potential deal” being discussed.

Other facts surrounding the terms of the potential agreement are unknown, including, whether FTX is looking for a complete acquisition or a sizable loan to stabilize its books, according to a Thursday Axios report. 

Kraken co-founder and departing CEO Jesse Powell has highlighted that he sees several red flags in FTX’s business model.

While FTX, whose international exchange is in hot water, has its headquarters in the Bahamas, Kraken is situated in the United States.

Also read: With Bitcoin, Ether And Altcoins Drowning In A Sea Of Blood, Can Investors Hope To Catch A Falling Knife?

FTX CEO Says US Users Are Fine

Sam Bankman-Fried, the CEO of FTX, said on Thursday that despite the turmoil surrounding the global exchange, FTX US consumers are "fine."

According to Bankman-Fried, “FTX International currently has a total market value of assets/collateral higher than client deposits.”

He said FTX is in talks with a number of players, discussing the company’s LOIs and term-sheets, and that every penny of that — and of the existing collateral —will go straight to users, unless or until FTX has done right by them.

In a blog post published on Thursday, Kraken outlined its efforts to remain solvent and financially stable through proof of reserves audits.

Powell Sees Red Flags In FTX

Powell, in a veiled jab at FTX, pointed out several red flags in the exchange.

“While we aim to give our clients access to bleeding-edge crypto products, we take a very conservative approach to our business operations, security, and financial resiliency. Survival & mission above profit,” Powell said.

Powell said that FTX might have some subsidiaries or licenses that Kraken might be interested in when asked by Bloomberg if Kraken would consider purchasing FTX.

“I’m sure they have some assets that are interesting, that have some value,” Powell said, adding that it does not mean Kraken would buy the exchange or provide financial aid.

Commenting on FTX’s balance sheet, Powell said: “I don’t think there’s going to be value there or anything close to what the hole seems to be.”

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