Crypto exchange founder was playing games on phone when he secured $900m investment

It is facing a liquidity crunch according to the boss of its main rival, which announced and then swiftly u-turned on an apparent rescue deal this week that appeared to have Mr Bankman-Fried’s blessing.

Changpeng Zhao, chief of the Binance cryptocurrency exchange, said on Tuesday he had signed a “non-binding” letter of intent to acquire FTX. A few hours later, Binance said it was not going ahead, citing news reports of a potential US regulatory investigation.

FTX’s own website warned on Thursday: “FTX is currently unable to process withdrawals. We strongly advise against depositing.”

Mr Bankman-Fried had posted to Twitter this week: “We have come to an agreement on a strategic transaction with Binance for FTX”.

Sequoia, one of Silicon Valley’s higher-profile corporate investors, published a lengthy profile of Mr Bankman-Fried in September in which it spelled out the mobile phone gaming allegations.

It said: “I sit ten feet from him, and I walked over, thinking, Oh, s–t, that was really good,” wrote Sequoia head of product Ramnik Arora, of his meeting with Mr Bankman-Fried. “And it turns out that that f—-r was playing League of Legends through the entire meeting.”

League of Legends is an online multiplayer battle game requiring considerable attention from its players.

Sequoia general partner Michelle Bailhe added: “We were incredibly impressed.” The investment business did not immediately respond to a request for comment.

Mr Bankman-Fried has previously said he is “infamous for playing League of Legends while on phone calls”. FTX has been contacted for comment.

The company is intending to carry out a fresh fundraising round next week, Reuters reported citing an internal staff memo.

British regulators have strongly advised against getting involved with FTX. A warning on the Financial Conduct Authority’s website says consumers should be “wary of dealing with this unauthorised firm” and says the Financial Services Compensation Scheme (FSCS) does not apply to dealings made with FTX.

The FSCS guarantees consumer deposits with UK-regulated financial services providers, guaranteeing compensation if a company collapses.

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