FTX CEO Bankman-Fried says some smaller exchanges are “secretly insolvent”
Sam Bankman-Fried, the founder and CEO of FTX, has claimed that more "third-tier" exchange failures are on the way. During an interview with Forbes, SBF shared his thoughts on the current state of the crypto market and its overall trajectory.
Initially, Bankman-Fried shed light on some recent instances of exchanges that landed in financial troubles. Both BlockFi and Voyager Digital faced financial crises following Three Arrows Capital’s fall.
FTX and Alameda Ventures were quick to jump in and rescue the two firms with credit lines. The loan is valued at $750 million. Nobody can guarantee if SBF would ever get his money back. Commenting on this, Bankman-Fried said, “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.”
Clearly, SBF’s intentions were to save the tumbling crypto market and prevent the contagion from spreading further. In a tweet thread, SBF had stated that it was the duty of crypto leaders to prevent market crashes even if it meant losing money.
While it may seem that Bankman-Fried is generous to failing companies, it’s impossible to save all of them. He is choosy about which ones to rescue, and not all the firms deserve to be saved.
“There are companies that are basically too far gone, and it’s not practical to backstop them for reasons like a substantial hole in the balance sheet, regulatory issues, or that there is not much of a business left to be saved,” SBF noted during the interview.
He further added, “There are some third-tier exchanges that are already secretly insolvent.” However, SBF refrained from naming any exchanges in particular.
Apart from this, Bankman-Fried also commented on the Tether losing its peg. While several industry watchers feel it’s only a while before it slumps, SBF doesn’t seem concerned. “I think that the really bearish views on Tether are wrong…I don’t think there is any evidence to support them,” SBF said.
While crypto giants like Coinbase are laying off employees, FTX remains profitable. For the last ten quarters, FTX has been in profit, whereas Coinbase, the biggest rival, has faced losses of over $432 million.
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