Summary:
- Sam Bankman-Fried suggested that some third-tier exchanges are in deep trouble but customers might not know yet.
- The FTX chief also opined that a few platforms are too far gone and providing backstops could be impractical.
- BlockFi and Voyager Digital received crucial credit lines to sustain their businesses from SBF-backed firms.
FTX CEO and Billonaire Sam Bankman-Fried believes a few third-tier crypto exchanges are already battling insolvency amid a possible bear cycle where token prices have slumped and uncertainty rules the market.
The comments from SBF were revealed in a recent report by Forbes. According to the exchange chief, some platforms are “secretly insolvent” and might not survive this crypto winter.
SBF denies any active merger talks with Robinhood but tells Forbes that more crypto exchange failures are coming. “There are some third-tier exchanges that are already secretly insolvent,” says Bankman Fried. https://t.co/pnyrbzCmmK
Bankman-Fried also dispersed rumors about an imminent acquisition of app-based brokerage and trading service, Robinhood.
During the latest crypto market slump, a plethora of exchanges and platforms have restructured operations in a bid to manage resources and avoid sinking. Exchanges like Coinbase and Gemini announce layoffs as high as 30% of their workforce. Such platforms also halted hiring and in some cases, rescinded offers.
Other services like Celsius and Babel suspended withdrawals due to liquidity pressure. Both platforms are yet to resume operations as of press time. Crypto hedge fund Three Arrows Capital is also faced with insolvency and loan repayment hurdles following the crash of Terra’s LUNA.
SBF opined that the contagion might not be over and that smaller crypto exchanges could be next to feel the heat. As of press time, there are over 600 crypto exchanges in operation across the globe with different levels of regulatory oversight.
Sam Bankman-Fried and Changpeng Zhao Want To Support Crypto’s Ecosystem But Cannot Bailout Every Company
CZ and SBF head two of the world’s largest crypto exchanges – Binance and FTX. Both billionaires have vocally expressed their sense of duty and responsibility to protect the crypto industry as companies navigate a harsh cycle.
However, both CEOs also stressed that not every firm is going to survive these market conditions or receive a lifeline due to several factors.
There are companies that are basically too far gone and it’s not practical to backstop them.
Notably, BlockFi and Voyager Digital secured credit facilities from SBF-backed Alameda Research and FTX. The credit lines have a combined worth of over $750 million in cash, USDC stablecoin, and Bitcoin.
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