3 min read
Sam Bankman-Fried, the CEO of crypto derivatives exchange FTX, said in an interview with CNBC’s Squawk Box that the exchange has at least $1 billion to deploy on acquisitions and bailouts.
Although he wouldn’t commit to a specific figure, Bankman-Fried said that, “You get to definitional issues here, of how much should we really feel comfortable deploying. Saying that there's another ballpark billion that is completely unencumbered, certainly will get you within a factor of two of the right answer.”
Bankman-Fried said that, “We try not to empty the coffers, so to speak.”
The exchange has been a key player in acquiring crypto projects that were at risk of going under during the market downturn.
Making the decision to pull the trigger on bailouts and acquisitions was no easy matter, Bankman-Fried said. “We only had a few days to make some of these decisions,” adding that the key factors were “backstopping customers and making sure they’re protected,” as well as “stopping contagion from spreading through the ecosystem.”
FTX’s bailout of Voyager Digital was one such example; Bankman-Fried explained how they extended “a sort of two-piece line of credit. The first was $70 million, and that $70 million was money they could just draw on immediately, no strings attached. And we knew we might lose that.”
Bankman-Fried echoed comments made in his interview with Decrypt’s gm podcast, in which he said that FTX could be “$70 million down the drain” as a result of the bailout, adding, “We’re not feeling too confident about getting that back.”
Asked by Squawk Box about the “sense of responsibility” that FTX thinks it has to keep crypto businesses afloat, Bankman-Fried said that in the long term, it’s important to the crypto ecosystem to try to find a solution. “It’s not going to be good for anyone long-term, if we have real pain, if we have real blowouts,” he said. “And it’s not fair for customers, it’s not going to be good for regulation.” It was, he added, “important for people to be able to operate in the ecosystem without being terrified that unknown unknowns were going to blow them up somehow.”
Speaking to Decrypt’s gm podcast earlier in the year, Bankman-Fried said that FTX was saving insolvent crypto firms because “frankly, is because it doesn't seem clear to me that there are others who are stepping up and doing that.”
In 2021, it was estimated that FTX’s revenue topped $1 billion in 2021, and its operating income is at a 1,842.85% increase.
FTX bought out Canadian exchange Bitvo in June, according to Bloomberg, and explored the possibility of providing support to crypto lender Celsius before reportedly walking away from the deal.
Not everyone is enamored of Bankman-Fried’s approach, though. Days after FTX announced a $250 million line of credit to struggling crypto broker BlockFi, Changpeng Zhao, CEO of rival crypto exchange Binance, wrote that bailouts shouldn’t “perpetuate bad companies." He added, "Let them fail. Let other better projects take their place, and they will.”
Decrypt-a-cookie
This website or its third-party tools use cookies. Cookie policy By clicking the accept button, you agree to the use of cookies.