FTX Builds $1 billion War Chest to Buy up Distressed Crypto and other Assets
CEO and co-founder of major cryptocurrency exchange FTX Sam Bankman-Fried (SBF) has revealed that the company has built an estimated $1 billion war chest to continue deploying capital in order to bail out distressed crypto firms and buy their assets.
Speaking in an interview with CNBC, he declined to state the specific amount in order not to sound too certain of the answer but noted that FTX is still within its comfort zone in the amount of funds it is willing to deploy without emptying its coffers.
“You have the issue of ‘how much do we feel comfortable deploying.’ Saying there’s another part billion here that is completely unencumbered will get you within a factor of too certain of the right answer,” SBF said when pressed on how much more FTX had to deploy.
SBF further highlighted that going into the bear market, FTX had a couple of billions of its own funds, added to funds it raised from venture capital and profits it has made this year and from last year as well.
Meanwhile, the 30 years old billionaire continues to maintain that his company’s philosophy is guided by the need to both protect consumers, as well as stop contagion from spreading across the crypto ecosystem due to the failure of any asset or firm. He holds that this will in the long term be good for customers, regulations, and the ecosystem at large.
FTX’s bailout activities producing mixed results so far
The Bahamas-headquartered exchange has engineered bailout deals with an estimated value of around $1 billion in the crypto industry this year. According to a Bloomberg report, some of these deals have already performed poorly while the results of others are showing hopeful signs.
In the report, SBF noted a $485 million loan made out to Voyager Digital Ltd. as one potentially sour deal as the amount had not been enough to keep the company from filing for bankruptcy in July. In contrast, the $400 million revolving credit bailout given to BlockFi, another troubled crypto lender, was showing signs of being effective.
SBF is not perturbed by the possible outcomes as he says FTX is not extending the aid to only earn a profit from every deal but to meet the need for capital in the market.
FTX reached a market valuation of around $32 billion following a Series C funding round it conducted in January as reported by CNBC. Regardless, the exchange has continued to explore ways to diversify its revenue stream away from just crypto fees amidst the market turmoil.