Coinbase's CEO says FTX's Sam Bankman-Fried reached out for emergency funds: 'It felt like a pretty bad situation that we wanted to stay away from'

• Coinbase CEO Brian Armstrong confirmed to CNBC that Sam Bankman-Fried approached him to try to raise emergency funds for FTX.
• Armstrong said it quickly became clear it wasn't a good investment for Coinbase. "It felt like a pretty bad situation," he said.

Sam Bankman-Fried has resorted to calling rivals of his FTX crypto exchange for help bailing out his embattled company after its deal with Binance fell through.

Coinbase CEO Brian Armstrong confirmed in an interview with CNBC on Thursday that Bankman-Fried had reached out to him for help raising money.

"It quickly became apparent to me that this wasn't the type of asset that we would invest in if it was actually that far underwater and if there had actually been either fraud or just misrepresentation to either customers or investors," Armstrong said.

"I was basically reading the room, and it felt like a pretty bad situation that we wanted to stay away from," he added.

Armstrong's revelation comes as Bankman-Fried reportedly warned investors that he needs to raise $4 billion in emergency funding or risk bankruptcy, according to a report by Bloomberg.

"I f---ed up," Bankman-Fried reportedly told investors.

It's been a hellish week for the crypto trading platform. Investors reportedly withdrew $6 billion from the FTX earlier this week on fears of a cryptocurrency meltdown, creating a liquidity crunch for the company.

Sources told Reuters that part of the company's liquidity issue came from alleged misuse of customer funds.

The crypto platform initially looked to its rival, Binance, for a bailout, but Binance's CEO pulled out of a deal, citing issues "beyond our control or ability to help."

Coinbase wasn't the only crypto company Bankman-Fried turned to for aid after the Binance deal fell through. Axios reported that Bankman-Fried also approached rival cryptocurrency exchange Kraken for help avoiding bankruptcy.

FTX did not respond to Insider's request for comment. Coinbase said it had "nothing to add."

Armstrong told CNBC he felt "duped" by Sam Bankman-Fried after revelations of how FTX reportedly misused customer funds came to light.

"I look back at all the interactions that I had with Sam, and I felt like he was very bright and genuine, and an eager person. Perhaps a bit young, perhaps a bit reckless in certain moments but not corrupt, and. Again, I hate to use that word because we don't know exactly what happened. Sometimes people get in over their heads, or misunderstandings happen," Armstrong said.