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FTX's Bankman-Fried Says It’s Worth Losing Money To Prop Up Crypto Industry
The crypto exchange's CEO is also willing to buy bitcoin for his company depending on the price.
Kabir V.
7:12 20th Jul, 2022
Markets

FTX co-founder and CEO Sam-Bankman Fried said he isn't bothered by losing some money if his bailouts keep the crypto infrastructure humming.

“It’s OK to do a deal that is moderately bad in bailing out a place,” the outspoken industry leader said at the Bloomberg Crypto Summit in New York on Tuesday. Bankman-Fried said the need to be a “good, constructive actor in this space” justifies “incinerating a small amount of money.”

“The bar is not: Is this a good return on investment?” he said. It’s more about maintaining the health of the wider industry.

FTX and Bankman-Fried’s Alameda Research have offered costly rescues to crypto lender BlockFi and crypto broker Voyager Digital amid a broad market downturn, and Bankman-Fried said he's open to helping more.

While FTX has extended millions of dollars to those companies, that hasn’t necessarily succeeded in bailing them out. BlockFi negotiated a deal where FTX could buy the company outright, and Voyager filed for bankruptcy earlier this month. When the Voyager deal came up during a panel discussion, Bankman-Fried laughed and shrugged off the dollars that may have been "incinerated."

Bankman-Fried, however, said that the conversations he’s been having with other crypto firms show that many of them aren’t clear about their own financial pictures. That’s the minimum requirement to keep him on the phone, he suggested.

“Step one is literally, ‘Do we know what’s going on?’” he said.

Bankman-Fried also said that FTX was standing ready to start buying bitcoin if the price fell to a certain, unnamed floor.

“We did have real conversations at some point,” he said. “There was a price. We did not hit that price.”

When bitcoin suddenly dove by a third toward $20,000 last month, Bankman-Fried said he was traveling and his first impulse was to race back to his company to help it handle things. But he said this forced stress test proved that the systems FTX created didn’t need any intervention.

“Nothing was on fire,” he said.

In the midst of crypto winter, he said it’s clear that regulations would likely have demanded that firms get properly collateralized in their deals, which would have prevented some of the current contagion. A flood of unsecured loans have shown which companies made appropriate risk-management decisions, he argued.

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