FTX CEO: Some Smaller Exchanges Are ‘Too Far Gone,’ ‘Insolvent,’ and Unlikely to Be ‘Saved’

Exchange FTX Robinhood Sam Bankman-Fried Tether

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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October 23, 2023 08:55 EDT

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Sam Bankman-Fried, the Founder of the crypto trading platform FTX, has warned that more crypto exchange failures “are coming,” and has stated: “There are some third-tier exchanges that are already secretly insolvent.”

The exchange chief was speaking to Forbes, and his comments appear to echo sentiments expressed in a report last week from the crypto data specialist Kaiko. The latter warned of pitfalls created by hard-to-understand “webs of relationships” between companies in the industry.

Kaiko added that the fibers linking all these firms were now being put under strain, and that other factors – such as a decline in trading volumes in the bear market – were also taking their toll.

Bankman-Fried also stated:

“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.”

Bankman-Fried refused to name any of the companies he thought were in trouble, but also took the time to “deny any active merger talks” with Robinhood after multiple media reports linked FTX with a deal to buy the stock trading app.

Forbes further added that the man known in crypto circles as SBF was also “keeping [an] eye on crypto miners, many of whom leveraged their balance sheet at breakneck pace to quickly scale and take advantage of this 21st century digital gold rush.”

The FTX boss claimed that his exchange “remains profitable” and pointed out that this had been the case for the past 10 quarters.

Earlier this month FTX announced it was providing the crypto lender BlockFi with a USD 250m loan, with its Founder also writing on Twitter:

“We take our duty seriously to protect the digital asset ecosystem and its customers.”

On Reddit, one community member opined:

“Using small exchanges definitely is risky with everything that’s going on. Ideally it’s best to have your own wallet.”

Another Redditor quipped that the FTX chief was “just pissed” that the long-running crypto exchanges YoBit and KuCoin were “still around.”

https://www.twitter.com/DegenSpartan/status/1541997400776376322

Meanwhile, Bankman-Fried waded into the discussion around the USD-pegged stablecoin tether (USDT), which for a short period last month lost its dollar peg.

He explained:

“I think that the really bearish views on tether are wrong. I don’t think there is any evidence to support them.”

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Learn more: 
– Smaller Exchanges Could Fall Due to Confusing ‘Web of Relationships’, Report Warns
– These Are the Types Crypto Projects that Could be Bailed Out According to Binance CEO

– US Fed to Blame for Downturn, Large Crypto Players Have Responsibility Toward Ecosystem – FTX CEO
– Canada’s Bitvo Acquired by FTX

– Voyager Digital Secures Credit Line from Alameda, May Send Three Arrows a Notice of Default
– BlockFi Secures USD 250M Credit Line from Bankman-Fried’s FTX