In a recent interview, Sam Bankman-Fried, the founder of the popular exchange FTX, warned that some crypto exchanges are “secretly insoluble” and may soon fail. Bankman-Fried’s FTX and Alameda Research have already helped Blockfi and Voyager Digital, as the 30-year-old billionaire sometimes says you have to do “what it takes to stabilize things and protect customers.”
Bankman-Fried’s FTX and Alameda Research Provide Lines of Credit to Specific Crypto Companies
La crypto economy was heavily affected by the current bear market and Terra LUNA and UST fallout that occurred last month. The fall of Terra probably began a significant domain effect, which saw many vulnerable companies suffer considerable losses.
Many of the problems that hurt the crypto community stem from massive leverage and most of the contagion impact is linked to lenders and borrowers. More than two weeks ago, crypto lender Celsius paused withdrawals, and “people familiar with the matter” said Celsius is dealing with notable financial difficulties.
Three Arrows Capital (3AC), a Singapore-based cryptocurrency hedge fund, allegedly fell victim to decisive liquidations and bought $ 200 million of a locked lunar classic (LUNC), which is now worth $ 700. The issues arising from Terra, Celsius and 3AC have apparently flowed to other crypto companies as well.
Bankman-Fried’s cryptocurrency trading company, Alameda Research, helped Voyager Digital deal with a 3AC discovery by providing the company with $ 500 million in credit. Its crypto exchange FTX gave crypto lender Blockfi a $ 250 million loan on June 21st.
Bankman-Fried: “Some Companies Are Too Far Away” or “There Is Not Much Business Left To Be Saved”
In addition, Bankman-Fried spoke about 3AC on June 19, and explained on Twitter that 3AC’s financial difficulties “could not have happened with an on-going protocol that was transparent.” June 28, 2022, Forbes author Steven Ehrlich did an interview with Bankman-Fried, and the CEO of FTX was very outspoken about crypto exchanges that are “secretly insolvent”.
Bankman-Fried also talked about the recent investments in Blockfi and Voyager, as the CEO of FTX explained that there is a chance that he may not receive a profit from his investment. “You know, we’re willing to make a little bad deal here if that’s necessary to stabilize things a bit and protect customers,” Bankman-Fried told the Forbes contributor. The FTX CEO said more platforms will lean from financial burdens in the near future.
“There are some three-tier exchanges that are already secretly insoluble,” Bankman-Fried detailed. “There are companies that have basically gone too far and it is not practical to support them for reasons like a big hole in the balance sheet, regulatory issues or that there is not much business left to be saved,” he added.
On May 27, 2022, Bankman Fried said FTX was ready to deploy billions on mergers and acquisitions. Bankman-Fried told Forbes that FTX is financially sound and has been profitable for 10 quarters.
He told Ehrlich that FTX is looking at over-leveled crypto miners. Bitcoin.com News also recently reported that estimates say there are currently $ 4 billion in miserable loans backed by crypto mining platforms. Bankman-Fried spoke with Ehrlich about the largest stalcoin by market valuation, tether (USDT), too. According to Ehrlich’s interview with Bankman-Fried, the FTX CEO doesn’t care about tether.
“I think the really bearish views on Tether are wrong … I don’t think there’s any evidence to support them,” Bankman-Fried told the reporter.
What do you think of Bankman-Fried’s recent interview about the distressed crypto companies? Let us know what you think about this topic in the comment section below.
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