Some crypto platforms could be on the brink 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 covertly on the brink 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 Forbes colleagues, the billionaire believes that many players are currently in serious trouble.

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

The hidden side of the iceberg

Several key players in the ecosystem have lost colossal amounts since the price drop. This is the case with the Celsius lending platform. After pharaonic losses, the company decided to: freeze withdrawals and transfers, causing a wave of panic throughout the ecosystem. The company is about to file for bankruptcy and has enlisted the help of several law firms specializing in corporate recovery.

Three Arrows Capital (3AC), a Singapore-based investment fund, was also affected 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’s also mention the case of Coinflex. Like Celsius, the platform has all recordings suspendedit is in due to extreme market conditions. The company also indicates that Roger Ver, a key figure in the ecosystem, has defaulted on its debts. 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-rate exchanges that are already secretly insolvent”† Specifically, other companies should announce bad news in the near future.

The founder of FTX is not talking 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 that during the market rally, too many platforms offered generous returns on cryptocurrency deposits to lure new customers.

FTX to the rescue

In this context of crisis, Sam Bankman-Fried recently took part in the rescue of multiple actors through FTX or Alameda Ventures, its investment fund. He came in particular to help BlockFi by granting it a $250 million revolving credit facility. Following Celsius, BlockFi is accused of mismanaging its clients’ assets and increasing its deficit. Bankman-Fried also came to the rescue of Voyager Digital by buying 11% of the company’s stock. Through Alameda Ventures, he also assigned a $670 million loan to the broker.

Questioned by NPR, the billionaire assures he is his “responsibility to seriously consider taking action, even if it is a loss for ourselves, to contain the contagion”† He also says that he is ready getting a bad deal if that’s what it takes to stabilize things and protect customers”† Yet the founder of FTX is unwilling to squander his fortune to save the most vulnerable players.

“Some companies have gone too far fundamentally. And it’s not possible to support them if there’s too much of a balance sheet, regulatory issues, or if there’s not much left to salvage.” emphasizes the entrepreneur.

These repeated rescues are part of rapid expansion strategy by Sam Bankman Fried. Clearly, the 30-year-old 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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