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Enjoy exclusive benefits with the GG Membership PassBillionaire FTX founder and CEO Sam Bankman-Fried said his exchange has a “responsibility” to bail out ailing crypto companies in times of crisis.
Speaking to NPR this weekend, Bankman-Fried said of the current crypto crash that, “I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion.” He added that, "Even if 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 plummet to prices below $18,000. The top cryptocurrency has since recovered somewhat, though at its current price of $20,600, it’s still well below half the value it started the year at.
"The core 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 largest hike since 1994. This has had a knock-on effect on crypto prices; when fiscal policies tighten, people dump their riskier assets. "Literally, markets are scared,” said Bankman-Fried. “People with money are scared."
The thirty-year-old, who relocated FTX to the Bahamas last September, pointed to the exchange's acquisition of Liquid Group in February as one example of how FTX has bailed out a smaller company.
In August 2021, FTX helped Liquid Group with a $120 million loan to recuperate losses from a $90 million attack that happened when Liquid’s digital wallets were compromised.
"We, I think about 24 hours later, stepped in and gave them a pretty broad line of credit to be able to cover all of their demands, to make sure customers were made whole, while thinking about the longer-term solution."
SBF weighs in
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 on 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 failing to meet margin calls to creditors, including BlockFi and financial services company Genesis. Several big lenders to 3AC, including crypto exchange BitMEX, have now started liquidating their positions.
Responding to a tweet asking industry figures how best to guard against another crisis like 3AC, Bankman-Fried tweeted “regulation can help here” before following up with, “so can DeFi,” adding the crisis would not have been possible with transparent on-chain decentralized finance apps to keep institutional credit transparent to retail investors.