Some crypto platforms are said to be on the verge of bankruptcy

The cryptocurrency market is still in the red. According to Sam Bankman-Fried, the CEO and founder of FTX, some platforms are also secretly on the verge of bankruptcy.

Sam Bankman-Friedthe CEO and founder of the cryptocurrency exchange platform FTX, paints a particularly pessimistic picture of the crypto-asset ecosystem. Asked by our colleagues from Forbes, the billionaire believes that many players are currently in great difficulty.

Indeed, companies in the sector are suffering from the collapse of the digital currency market. Since the crash of the UST and the Luna ecosystem, the Bitcoin king has completely unscrewed. The cryptocurrency is currently trading around $20,000. As always, Bitcoin has dragged most digital currencies in its wake. It’s a real carnage and the worst is yet to come, experts say.

The hidden side of the iceberg

Several key players in the ecosystem have lost colossal sums since the fall in prices. This is the case of the Celsius lending platform. After pharaonic losses, the company resolved to freeze withdrawals and transfers, causing a wave of panic throughout the ecosystem. Close to filing for bankruptcy, the company has requested the services of several law firms specializing in the recovery of companies.

Three Arrows Capital (3AC), a Singapore-based investment fund, was also hit by the crash. A court in the British Virgin Islands has just ordered liquidation of the fund. Founded in 2012, 3AC was unable to repay a debt incurred with Voyager Digital, a digital asset broker. The fund was excessively exposed to the UST.

Let us also mention the case of Coinflex. Like Celsius, the platform has suspended all withdrawalsit’s in due to extreme market conditions. The company also specifies that Roger Ver, a key figure in the ecosystem, has not honored his debts to it. He owes $47 million to Coinflex.

According to Sam Bankman-Fried, it’s all about the visible side of the iceberg. The billionaire believes thatthere “are third-tier exchanges that are already secretly insolvent”. Concretely, other companies should announce bad news in the near future.

The founder of FTX does not talk about top platforms, such as Binance, Coinbase or Crypto.com, but about smaller companies. As a reminder, there are more than 600 exchange platforms in the world. Bankman-Fried says too many platforms offered generous returns on cryptocurrency deposits during the market rally to entice new customers.

FTX to the rescue

In this context of crisis, Sam Bankman-Fried recently participated in the rescue of several actors through FTX or Alameda Ventures, its investment fund. In particular, he came to the aid of BlockFi by granting it a $250 million revolving credit facility. Mirroring Celsius, BlockFi is accused of mismanaging its clients’ assets and widening its deficit. Bankman-Fried also came to the rescue of Voyager Digital by buying 11% of the company’s shares. Through Alameda Ventures, he also allocated a $670 million loan to the broker.

Questioned by the NPR, the billionaire assures that he is of his “responsibility to seriously consider intervening, even if it is at a loss for ourselves, to stem the contagion”. He also says he is ready to get a bad deal if that’s what it takes to stabilize things and protect customers”. Nevertheless, the founder of FTX is not willing to squander his fortune to save the most fragile players.

“Some companies have fundamentally gone too far. And it is not possible to support them if there is too big a hole in the balance sheet, regulatory problems or if there is not much left to save”, emphasizes the entrepreneur.

These repeated rescues are part of rapid expansion strategy by Sam Bankman-Fried. Clearly, the 30-something is taking advantage of the bear market to grow his businesses and strengthen his grip on the ecosystem. With this in mind, FTX would also consider redeem Robinhooda very popular trading application.

Source :

Forbes

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