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Sam Bankman-Fried has ‘few billion’ to assist crypto industry

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Sam Bankman-Fried, head of considered one of the biggest cryptocurrency exchanges, FTX, said he and his company still have a “few billion” available to shore up struggling firms that might further destabilize the digital asset industry, but that the worst of the liquidity crunch has likely passed.

Bankman-Fried, 30, who’s from California but lives within the Bahamas where FTX is predicated, has turn out to be crypto’s white knight in recent weeks, throwing lifelines to digital asset platforms which have faltered as cryptocurrencies prices have cratered. Bitcoin is down around 70% from its all-time November high of nearly $69,000.

“We’re beginning to get just a few more firms reaching out to us,” Bankman-Fried said in an interview. Those firms are generally not in dire situations, though some smaller crypto exchanges should fail, he said, adding that the industry has moved beyond “other big shoes that should drop.”

Bankman-Fried’s crypto-trading firm, Alameda Research, gave crypto-lender Voyager Digital a $200 million money and stablecoin revolving credit facility, and a facility of bitcoin, as the corporate faced losses from exposure to crypto hedge fund Three Arrows Capital. On Wednesday, Voyager filed for bankruptcy. 

Also in June, FTX handed cryptocurrency lender BlockFi a $250 million revolving credit facility and on Friday announced a deal giving FTX the precise to buy it based on certain performance triggers. 

Bitcoin is down around 70% from its all-time November high of nearly $69,000.REUTERS

The goal of the bailouts was to guard customer assets and stop contagion from ricocheting through the system, Bankman-Fried said.

“Having trust with consumers that things will work as advertised is incredibly necessary and if broken is incredibly hard to get back,” he said.

In January, FTX unveiled FTX Ventures, a $2 billion enterprise capital fund focused on digital asset investments, which it has since drawn on to assist bail out firms which are lacking liquidity, but not assets.

“It does get increasingly expensive with each considered one of these,” Bankman-Fried said, adding that the firm still had enough money available to do a $2 billion deal if vital.

“If all that mattered was one single event, we could get above a pair billion,” he said, stressing that isn’t his preference.

On one or two occasions, Bankman-Fried, who made billions arbitraging cryptocurrency prices in Asia starting in 2017, said he has used his own money to backstop failing crypto firms when it didn’t make sense for FTX to accomplish that.

“FTX has shareholders and we’ve an obligation to do reasonable things by them and I actually feel more comfortable incinerating my very own money,” he said.

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

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

Sam Bankman-Fried Bankman-Fried, 30, who’s from California but lives within the Bahamas where FTX is predicated, has turn out to be crypto’s white knight in recent weeks.via REUTERS

Crypto winter

Because the Federal Reserve has begun aggressively climbing rates to combat hyperinflation, investors have fled the crypto markets.

The crash in cryptocurrency prices, known as “crypto winter,” can have bottomed, as prices have stabilized, but it would largely rely upon the macro-economic situation, said Bankman-Fried, a 2014 graduate of the Massachusetts Institute of Technology.

“I don’t think it’s an existential threat to the industry, but I do think it’s a good bit worse that I might have anticipated,” Bankman-Fried said.

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

He has said he plans to offer away 99% of his wealth, and that he could spend as much as $100 million supporting candidates within the 2024 election cycle, specializing in issues like pandemic prevention and bipartisanship.

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

“Every quarter this yr, I expect our workforce to be larger than the previous quarter, but we’re trying to not grow insanely quickly,” he said.

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