Billionaire FTX founder and CEO Sam Bankman-Fried said his exchange has a “responsibility” to bail out struggling crypto companies in times of crisis.
Talk to NPR over the weekend, Bankman-Fried said of the current crypto crash that “I think we have a responsibility to seriously consider intervening, even if at a loss to ourselves, to stem the contagion”. He added that “Even though we weren’t the ones who caused it, or weren’t involved in it. I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive.”
The recent cryptocurrency crash has seen Bitcoin prices plummet less than $18,000. The major cryptocurrency has since recovered somewhat, although at its current price of $20,600 it is still well under half the value it started the year at.
“The main driver of this has been the Fed,” Bankman-Fried said, referring to the Federal Reserve’s decision to raise interest rates by 0.75%, the biggest jump. since 1994. This had a ripple effect on crypto prices; when fiscal policies tighten, people dump their riskiest assets. “Literally, the markets are scared,” Bankman-Fried said. “People with money are scared.”
The 30-something, who moved FTX to the Bahamas last septemberhighlighted the exchange of acquisition of the Liquide Group in February as an example of how FTX bailed out a small company.
In August 2021, FTX helped Liquid Group with a $120 million loan to recoup losses from a $90 million attack that occurred when Liquid’s digital wallets were compromised.
“We, I think about 24 hours later, stepped in and gave them a large enough line of credit to cover all their demands, to make sure the customers were happy, while thinking about the longer term solution. ”
Bankman-Fried is something of a thought leader in the industry. His Twitter is often a hive of opinions on current industry affairs and speculation about the future of crypto.
just yesterday, he gave his two cents on the current crisis at Three Arrows Capital (3AC). The crypto hedge fund is rumored to be close to insolvency after allegedly do not respond to margin calls to creditors, including BlockFi and financial services company Genesis. Several major lenders to 3AC, including crypto exchange BitMEX, have now started liquidation of their positions.
Responding to a tweet Asking industry figures how best to hedge against another crisis like 3AC, Bankman-Fried tweeted, “regulation can help here” before continuing with, “so can Challenge“, adding that the crisis would not have been possible with transparent on-chain decentralized finance applications to keep institutional credit transparent for retail investors.
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