Crypto’s second-richest billionaire has issued a warning concerning crypto-asset firms. Sam Bankman-Fried said there are financial difficulties in a lot of digital management companies. Their woes continue to mount as the market keeps falling.
The bankruptcy of the Unknown
According to Forbes, the CEO and co-founder of FTX thinks some crypto exchanges are bankrupt. According to the report, Bankman-Fried said most exchanges in this category are less-known.
In his words, there are lots of third-tier crypto exchanges that are now insolvent. The report stated further that he believes some of them are not salvageable. He said they are just too far gone and not worth it to stop them.
Part of why they can’t be helped includes huge gaps in their balance sheets. Another consideration is that some of them have unresolved regulatory issues. Importantly, a lot of them do not have much business that needs saving.
The FXT CEO is said to have a goal of aiding struggling crypto firms financially. The Forbes report says it is aimed at stabilizing those affected businesses. At the same time, financial aid will help safeguard the investment of users.
In his words, Bankman-Fried said FTX is willing to do a relatively bad deal. It is necessary if that is what it requires to bring stability and protect users.
The Needed Bailout
In the past week, FTX pumped about $250 million into BlockFi. The fund is to help it boost its balance sheet following the crash of digital assets. BlockFi is a cryptocurrency lender.
Earlier in the month, Voyager Digital got funded to the tune of $200 million. It also received 15,000 Bitcoin, both from Alameda Research. Both funds came in a revolving line of credits.
Alameda is a quant trading company also founded by Bankman-Fried. Voyager Digital, on the other hand, is another crypto service platform.
Bankman-Fried was named the second-richest crypto billionaire by Forbes in its 2022 list. He has a net worth of $24 billion.
The richest crypto billionaire is the Binance co-founder and CEO, Changpeng Zhao. Changpeng Zhao is worth $65 billion.
Apart from firms facing insolvency, a number of solvent firms have been laying off staff. They embarked on this policy in order to keep their firms afloat. Some of the companies include Bybit and Coinbase.
The first general step crypto firms, however, took was to freeze asset withdrawals on their platform. There was a general panic instigated after Terra’s ecosystem collapsed.