FTX CEO Sam Bankman-Fried claimed in an interview that several small cryptocurrency exchanges have already “hidden bankruptcy.” He warned of the possibility that many more would fail. Here are the details…
Crypto billionaire: Many small companies are on the verge of bankruptcy
Speaking to Forbes, Bankman-Fried warned that during the crypto rally over the past two years, reckless investing could lead to a series of failures after prices plummeted. This was also due to several smaller projects offering unsustainable double-digit returns once crypto prices began to fall. Other smaller exchanges that offer returns far beyond their capital levels, according to the crypto billionaire, are also likely to join the group of bankruptcies. On the other hand, according to Bankman-Fried, there are companies that have fundamentally gone too far and it is impractical to stop them.
Bankman-Fried’s comments also came when the founder offered lines of credit to two troubled firms, Voyager Digital and BlockFi. However, crypto lending firm Celsius seems to have missed the possibility of a line of credit as it faces bankruptcy. As we reported as Kriptokoin.com, trading companies such as Three Arrows Capital were conducting high-risk transactions. These operations failed due to the recent crash. Therefore, now, it is facing bankruptcy.
FTX CEO unsure of bailouts payoffs
The ongoing threats of bankruptcy in the market are driven by three main factors: the Terra crash in May, the departure of Lido Staked Ethereum from its stable, rising inflation and concerns over interest rates. But given the extent to which markets have thawed, Bankman-Fried said recent bailouts through FTX and Alameda could be a “bad deal.” But he conceded that these were sufficient to maintain stability and retain customers.
Still, altruism isn’t the only goal of the FTX CEO. Reports indicate that FTX is considering buying stakes in both Voyager and BlockFi for lines of credit. Judging by the comments, FTX could catch up with them too, as smaller players are likely to go bankrupt. Bankman-Fried reassured Forbes that the exchange is still profitable, even though peers like Coinbase have posted huge losses this year.
Bankman-Fried says Tether fear is unfounded
One asset that the FTX CEO says will weather the upcoming crypto storm is the stablecoin Tether (USDT). Fear about USDT’s reserves has dominated the market in the past few months. However, at this time, the price of USDT did not show any signs of divergence from the dollar. Bankman-Fried stated that negative views on USDT are “wrong”. He said there was no evidence behind these views. Recently, Tether CTO Paolo Ardoino said that the stablecoin is taking on more market stress. Still, the broader crypto market remains unresolved, with the factors that led to its recent decline; shows no signs of recovery.
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