In a recent interview, Sam Bankman-Fried, founder of the popular exchange FTX, said some crypto exchanges are “secretly insolvent” and may soon fail Warning that Bankman-Fried’s FTX and Alameda Research, as the 30-year-old billionaire says, sometimes you have to do “what it takes to stabilize things and protect customers,” and has already helped Blockfi and Voyager Digital We’ve done that.
Bankman-Fried’s FTX and Alameda Research Provide Credit Lines to Specific Crypto Firms
Provide Credit Lines to Specific Crypto Firms
The crypto economyhas been hit hard by the current bear market and the Terra LUNA and UST fallout that took place last month; the fall of Terra has undoubtedly started a significant domino effect with many exposed firms suffering substantial losses.
Much of the problems plaguing the crypto community stem from massive leverage, and most of the contagion effect is tied to lenders and borrowers. more than two weeks ago, crypto lender Celsius suspended withdrawals, and “people familiar with the matter” say Celsius is dealing with significant financial difficulties They state that Celsius is dealing with pronounced financial difficulties.
Singapore-based crypto hedge fund Three Arrows Capital (3AC), reportedly the victim of a significant liquidation,purchased200 million of locked Luna Classic (LUNC), now worth $700 U.S. The problems stemming from Terra, Celsius, and 3AC appear to be dropping exposure to other crypto companies as well.
Bankman-Fried’s quantitative cryptocurrency trading firm Alameda Research provided a $500 million line of credit to Voyager Digital to help address 3AC’s exposure. His crypto exchange FTX provided a $250 million line of credit to crypto lender Blockfi on June 21.
Bankmanfried: ‘Some companies are dead’ or ‘There’s not much business left to save’
Additionally, Bankman-Fried spokeabout 3AC on June 19, explaining on Twitter that 3AC’s financial woes “could not have happened with a transparent on-chain protocol. “2022 On June 28, Forbes authorSteven Ehrlichinterviewed Bankman-Fried and the FTX CEO was very candid about the crypto exchange being “secretly insolvent.”
Bankman-Fried also discussed his recent investments in Blockfi and Voyager, as the FTX CEO explained that he may not get a return on his investment Bankman-Fried told a Forbes contributor, “We need to stabilize things The FTX CEO said that more platforms will be stepping down from the financial burden in the near future.
“There are third-tier exchanges that are already secretly insolvent,” Bankman-Fried elaborated. He added, “There are companies that are basically too stuck to be practical to support, either because they have substantial holes in their balance sheets, regulatory problems, or not much business left to save.”
On May 27, 2022, Bankman Fried said the FTX was prepared to invest billions in M&A. Bankman Fried told Forbes that FTX is financially sound and has been profitable for 10 quarters.
He told Ehrlich that FTX is looking at overleveraged crypto miners.Bitcoin.com News also recently reported that estimates show that there is currently $4 billion in bad debt backed by crypto mining rigs.Bankman- Fried also spoke with Ehrlich about Tether (USDT), the largest stablecoin by market valuation, and according to Ehrlich’s interview with Bankman-Fried, the FTX CEO is not concerned about Tether.
“I think the really bearish views about Tether are wrong … I don’t think there is evidence to support them,” Bankman-Fried told reporters.
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