In a recent interview with Forbes, Sam Bankman-Fried termed the “smart vulture capitalist” in the beleaguered crypto market, made some startling revelations. Without naming any specific crypto exchanges, he warned that some of them are already secretly insolvent.
He stated that more crypto exchange failures would occur. “There are some third-tier exchanges that are already secretly insolvent,” he says.
Many cryptocurrency exchanges have been in hot water, either because they are vulnerable to scammers and hackers due to a lack of meaningful regulatory oversight or because they offer generous margin loans to their clients (up to 20 times their initial capital).
Other reasons include the fact that organizations like the Commodities Futures Trading Commission only control a small number of crypto derivatives markets, or that no member organization exists to self-regulate crypto exchanges globally.
The FTX co-founder even spoke about saving Voyager Digital and BlockFi from Three Arrows Capital’s defaults.
The clock had struck twelve for Three Arrows Capital’s loan from the digital asset brokerage Voyager Digital, which eventually issued a default notice to 3AC.
“You know, we’re willing to do a somewhat bad deal here if that’s what it takes to sort of stabilize things and protect customers,” he says.
FTX already owns 7.6% of Robinhood and is rumored to be considering an acquisition.
Also Read: FTX Rebuff Rumors of Sam Bankman-Fried Acquiring Robinhood
Will Bankman-Fried attempt to bail out the crypto exchanges as well? Well, it appears that his cash infusions are far from altruistic.
“There are companies that are basically too far gone, and it’s not practical to backstop them for reasons like a substantial hole in the balance sheet, regulatory issues, or that there is not much of a business left to be saved,” he comments.
