FTX founder and CEO Sam Bankman-Fried said on Tuesday that prioritizing customers’ getting their deposits back means it’s okay to get a “moderately bad” deal while bailing out troubled cryptocurrency companies.
The CEO of cryptocurrency exchange FTX talked about bankrupt companies,
Speaking at the Bloomberg Crypto Summit, Bankman-Fried, who is trying to bail out some struggling firms in the industry, said such investments are not necessarily about maximizing return on investment. Bankman-Fried said some of the cryptocurrency market crash could be attributed to the “herding behavior” triggered by a tight monetary policy. “The world believed it would be easy money forever and all numbers except the value of the dollar would continue to rise,” the CEO said.
A signal has changed and prices have generally collapsed. The CEO pointed out that this is what investing looked like during the “peak frenzy”. Bankman-Fried told bankruptcy-filing crypto hedge fund Three Arrows Capital that “their trades are probably more like punting than arbitrage,” explaining that the firm’s position is not necessarily liquid, but that they lost their money.
Can FTX buy Bitcoin?
As we reported on cryptocoin.com, FTX and Alameda Research have submitted costly bailouts to crypto lender BlockFi and crypto broker Voyager Digital during a broad market downturn. Bankman-Fried said he was open to more help. While FTX has given these companies millions of dollars, it hasn’t been able to save them. But Bankman-Fried said his conversations with other crypto firms showed that many were not clear about their own financial pictures.
Bankman-Fried also said that FTX is ready to buy Bitcoin if the price drops to a certain bottom. However, he did not explain what that level was. However, he explained that we have not dropped the price yet. The CEO used the following statements:
At one point we had real conversations. There was a price. We haven’t dropped that price yet.
When Bitcoin suddenly slumped by a third to $20,000 last month, Bankman-Fried said he was traveling and his first impulse was to get back to his company to help him get things done. But he said this mandatory stress test proves that the systems that FTX has built don’t need any intervention. In the middle of crypto winter, he said, regulations will likely require firms to have appropriate collateral in their deals, which could prevent some of the current contagion. He argued that the flood of unsecured loans showed which companies were making appropriate risk management decisions.
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