Friday, December 2, 2022

FTX CEO says firm will step in to help “stem contagion’

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The last few weeks have spelled nothing but bad news for cryptocurrencies. Amid the brutal price crash, made worse by macro headwinds, has been a spate of negative headlines about crypto. 

Simply, crypto winter has some projects facing collapse or on the verge of biting the dust.

Commenting on the developments, FTX CEO Sam Bankman-Fried said the crypto sector needs to step in to stop any further contagion.

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 noted that this was the responsible thing to do, even if they have no involvement in it. “I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive,” he added in the comments NPR first published on Sunday.

Rescue plans 

UST’s collapse in May heralded a string of liquidity issues for several crypto companies, top among them crypto lender Celsius Network, which froze customer withdrawals amid a liquidity problem.

Then Three Arrows Capital, a Singapore based crypto hedge fund missed margin calls, and late last week, crypto lender Babel Finance also froze withdrawals citing, again, liquidity issues.

Bankman-Fried did not provide specific details on what he or Alameda has in the pipeline. However, his comments come at a time there are various rescue plans underway for these projects, including one for  Celsius announced on Sunday.

Last week, crypto broker Voyager Digital secured a revolving line of credit – $200 million in cash/USDC and 15,000 BTC – from Alameda Research saying the funds will help safeguard its customers’ assets.

In 2021,  FTX came to the aid of Japanese crypto exchange Liquid after it was hacked for $100 million. At the time, Bankman-Fried’s platform extended a $120 million financing deal to Liquid before going on to acquire the exchange.



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