According to Forbes, after bailing out shaky digital currency platforms BlockFi and Voyager Digital, Sam Bankman-Fried, the 30-year-old billionaire creator of FTX, predicts that some crypto exchanges will fail shortly.
The question on everyone’s mind in the crypto community is whether we’ve struck the bottom of the market. Since November, about $2 trillion in crypto market value has vanished.
However, the fallout is far from over. Earlier last month, Singapore-based Three Arrows Capital (3AC), a heavily leveraged crypto trading firm with $200 million in Luna exposure, declared bankruptcy.
Three Arrows had borrowed huge sums from a number of crypto businesses, including Voyager Digital in New Jersey and BlockFi in New York.
To avoid Three Arrows’ default, the two digital currency exchanges went to billionaire Sam Bankman-Fried, creator of FTX and the richest person in crypto, with a net worth of $20.5 billion.
He offered credit facilities totaling $750 million to FTX and his quantitative trading firm Alameda. Bankman-investment Fried’s is not guaranteed to be repaid.
“You know, we’re willing to do a somewhat bad deal here, if that’s what it takes to sort of stabilize things and protect customers,” says SBF.
Sam Bankman-Fried said,
“We’re willing to do a somewhat bad deal here, if that’s what it takes to sort of stabilize things.”
Bankman-monetary Fried’s injections are everything from philanthropic. He has emerged as a savvy vulture capitalist in the troubled cryptocurrency industry, fully aware that his own fortune is dependent on its healthy recovery and expansion.
Bankman-Fried has also invested in cryptocurrency brokerage Robinhood, where FTX already has a 7.6% stake and is said to be considering an acquisition.
Bankman-Fried denies any active merger discussions with Robinhood but warns Forbes that more crypto exchange failures are on the way. “Some third-tier exchanges are already privately insolvent,” Bankman-Fried argues.
On November 6, Binance CEO Changpeng Zhao tweeted that the exchange would start selling off its FTT holdings as a result of “recent revelations.” It appears that Zhao was alluding to a previous report that detailed Alameda Research’s balance sheet.
Sam Bankman-Fried, who runs FTX, is also the owner of the cryptocurrency trading company Alameda.
