Crypto exchange FTX has “a few billion” to support the industry – Bankman-Fried

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Sam Bankman-Fried, head of one of the biggest cryptocurrency exchanges, FTX, said he and his company still have “a few billion” left to shore up struggling companies that could further destabilize the asset industry. digital, but that the worst of the liquidity crisis is probably over.

Bankman-Fried, 30, originally from California but living in the Bahamas where FTX is based, has become the white knight of crypto in recent weeks, throwing lifelines at digital asset platforms that have faltered as the Cryptocurrency prices have crashed. Bitcoin is down about 70% from its all-time high of nearly $69,000 in November.

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“We’re starting to get a few more companies contacting us,” Bankman-Fried said in an interview. These companies are generally not in dire straits, although some smaller crypto exchanges may still fail, he said, adding that the industry has moved beyond “other big shoes that have to fall.”

Bankman-Fried’s crypto-trading firm Alameda Research has granted crypto lender Voyager Digital a $200 million cash and stablecoin revolving credit facility, as well as a bitcoin facility, as the company was incurring losses due to exposure to crypto hedge fund Three Arrows Capital. On Wednesday, Voyager filed for bankruptcy.

Also in June, FTX granted US cryptocurrency lender BlockFi a $250 million revolving credit facility and on Friday announced an agreement giving FTX the right to buy it based on certain performance triggers.

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The goal of the bailouts was to protect client assets and prevent contagion from ricocheting through the system, Bankman-Fried said.

“Having trust with consumers that things will work as advertised is extremely important and if something goes wrong, it’s extremely difficult to recover,” he said.

In January, FTX unveiled FTX Ventures, a $2 billion venture capital fund focused on digital asset investments, which it has since relied on to help bail out businesses that are cash-strapped but not cash-strapped. of assets.

“It’s getting more and more expensive with each one of them,” Bankman-Fried said, adding that the company still has enough cash on hand to strike a $2 billion deal if needed.

“If all that mattered was a single event, we could go over a few billion,” he said, stressing that was not his preference.

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On a couple of occasions, Bankman-Fried, who made billions arbitrating cryptocurrency prices in Asia starting in 2017, said he used his own money to prop up failing crypto companies while this didn’t make sense for FTX to do that.

“FTX has shareholders and we have a duty to do reasonable things with them and I certainly feel more comfortable incinerating my own money,” he said.

Bankman-Fried also revealed in May that he had personally taken a 7.6% stake in Robinhood Markets Inc, capitalizing on the trading app’s weakened share price.

Forbes pegged Bankman-Fried’s net worth this year at around $24 billion, but Bloomberg’s Billionaires Index in May said that figure had been cut in half due to the crypto crash.

CRYPTO WINTER

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As the US Federal Reserve began aggressively raising rates to combat hyperinflation, investors fled the crypto markets.

The cryptocurrency price crash, dubbed “crypto winter,” may have bottomed out as prices stabilized, but much will depend on the macroeconomic picture, Bankman-Fried said. graduated in 2014 from the Massachusetts Institute of Technology.

“I don’t think it’s an existential threat to the industry, but I think it’s a little worse than I expected,” Bankman-Fried said.

Bankman-Fried began his career in finance at quantitative trading firm Jane Street, then founded crypto trading firm Alameda Research and in 2019 founded FTX, which was valued in January at $32 billion.

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He said he plans to give away 99% of his wealth and could spend up to $100 million to support candidates in the 2024 election cycle, focusing on issues such as pandemic prevention. and bipartisanship.

As rival crypto exchanges face layoffs after earlier hires, FTX has around 300 employees and Crunchbase pegs Alameda’s staff at fewer than 50.

“Every quarter this year, I expect our headcount to be bigger than the previous quarter, but we’re trying not to grow incredibly quickly,” he said. (Reporting by John McCrank and Megan Davies in New York; additional reporting by Hannah Lang in Washington; Editing by Chizu Nomiyama)

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