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HomeCryptoSome platforms would be "secretly insolvent", says Sam Bankman-Fried

Some platforms would be “secretly insolvent”, says Sam Bankman-Fried

In an interview, the founding boss of FTX talks about the state of the cryptocurrency market, where he is starting to play an important role. He also warned about the risks of insolvency of other platforms.

After the two crypto-crashes of the past few weeks, quite a few funds, lenders and platforms specializing in cryptocurrency have found themselves dried up. But the housework is far from done according to one of the strong men of the sector: Sam Bankman-Fried, the founding boss of the FTX cryptocurrency trading platform.

We have been hearing a lot about him for the past few days, when he is suspected of having views on the Robinhood trading application, in which he has shares. But no active discussions are taking place right now, he told Forbes on Tuesday, adding that the most pressing news may not be there.

For him, the cryptocurrency ecosystem is facing a real concern of chronic insolvency on the side of cryptocurrency exchanges. After the Three Arrows Capital fund which cracked, with the collapse of the Terra/Luna ecosystem, a dozen trading platforms had to stop withdrawals and transfers, as they were out of liquidity.

“Some companies have fundamentally gone too far. And there’s no way to support them if there’s too big a hole in the balance sheet, regulatory issues, or there’s not much left to salvage,” says this last.

And according to Sam Bankman-Fried, a growing number of them are “secretly insolvent”, victims of investor panic over the sharp drop in cryptocurrencies and too vulnerable to hacks. He is actively involved in the rescues of several of them at the moment, through FTX but also his investment fund Alameda Ventures. He has thus put in the pot in the BlockFi platform or with his Almedia investment fund in Voyager Digital.

“We are ready to make a bad deal, if that is what it takes to stabilize things and protect customers”, nevertheless admits the latter.

Many of them are in far too poor financial health, and bailing them out is trying to fill a bottomless pit. Now there is technology, blockchain and market share to scrap and amidst this imploding world, Sam Bankman-Fried is arguably emerging as the strongman of the moment, with the largest fortune in the sector ($20.5 billion) and a platform, FTX, which unlike Binance and Coinbase, has been profitable over the last 10 quarters.

Antoine Larigaudrie edited by PA



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