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Sam Bankman-Fried, the CEO and founder of prominent cryptocurrency exchange FTX, believes that his company’s efforts to stop the ongoing crypto contagion by extending lines of credit to lenders in the space have been “well worth it,” he said during a virtual fireside chat hosted by BTIG earlier in the week ended July 1.
Of course, FTX isn’t looking to intervene in all distressed crypto firms, as “some third-tier exchanges are already secretly insolvent,” he told Forbes in an interview on June 29.
The 30-year-old billionaire investor is expecting the number of platforms operating in the crypto industry to contract, followed by a “hopefully” more sustainable expansion, he told BTIG, adding that the reduction would be driven by firms ultimately shutting down or becoming increasingly irrelevant.
Nevertheless, FTX has been dominating headlines about bailing out certain crypto-focused firms. Recall on June 21 when the company extended a credit line of $250M to BlockFi in an effort to provide the crypto lender with “access to capital that further bolsters our balance sheet and platform strength.”
Furthermore, Bankman-Fried attributed bitcoin’s (BTC-USD) recent slump to $30K to the Federal Reserve hiking interesting rates to bring down persistently high inflation. The central bank’s “rate increases, and its indications that more would be on the way, have led to expectations of a reduction in money supply and less investable capital for risk assets including crypto,” BTIG analyst Mark Palmer wrote in a note Friday, citing Bankman-Fried’s remarks.
Bitcoin’s (BTC-USD) subsequent drop to under $20K from $30K had been driven by idiosyncratic factors within the crypto space, namely the collapse of algorithmic stablecoin TerraUST (UST-USD) in May, followed by the meltdowns in crypto lender Celsius and hedge fund Three Arrows Capital. Over the past 24 hours, bitcoin is roughly flat at $19.2K.
At the same time, leverage in the cryptoverse has been “massively down” in the past month amid intense selling pressure, SBF noted.
Earlier this week, (June 30) FTX nears deal to buy crypto lender BlockFi for pennies on the dollar.