The chief executive of the FTX exchange, Sam Bankman-Fried, has decided to become the savior of the crypto industry worth $990 billion. He is offering a lifeline in a bailout this week, his second one that he will make in the last couple of weeks. The CEO of the crypto trading platform offered a loan of worth $250 million to BlockFi. Earlier, the company had offered a loan worth $485 million to Voyager Digtial, in order to help drag it back from the brink of bankruptcy.
FTX is the Savior
The rescue steps taken by the FTX platform come as a breath of fresh air for the crypto market and have also given confidence in the industry a much-needed boost. The current turmoil in the market has put event giants under stress. Even though the whole point of the crypto space is to not have a central authority, FTX and its CEO are acting like the crisis authorities did back in 2008 for bailing out banking institutions.
According to reports, Sam Bankman-Fried actually prepares for these emergencies, as he believes these can happen anytime and that a crypto winter can be quite long-lasting.
The Crypto Space is Struggling
Since December, there has been a 70% decline in the value of the world’s largest cryptocurrency i.e. Bitcoin. This has obviously taken a toll on other cryptocurrencies as well and the companies operating in the space. The crypto bear market has made it difficult for companies to survive and last month, the TerraUSD (UST) stablecoin and its sister crypto LUNA imploded, wiping out a significant amount of the market’s capitalization.
The loan that FTX has offered to Voyager and BlockFi is backed by the Market Asset Token and shows the scale of support that is being offered in the industry. Last week, BlockFi had announced that it was cutting down one-fifth of its workforce in light of the difficult conditions in the market. BlockFi’s inability of being able to pay Crypto Capital enough money drove the company to liquidate some of their holdings and added to their problems.
FTX Steps In
Due to these mounting problems, FTX decided to step in to assist BlockFi and offered it the $250 million loan. This is a revolving credit facility, but neither of the companies disclosed the terms or interest involved. FTX claimed that the company would pay all of its client’s balances if the company were to go bankrupt.
According to the CEO of FTX, BlockFi does not have any debt, except for what it owes Three Arrows and Celsius, both of which are also facing their own share of problems because of the collapse of the TerraUSDstablecoin.
Bankman-Fried tweeted that BlockFi had taken immediate steps by cutting down its staff and had also added cash, so their assets were safe and operations were continuing as normal. Michael Bankman-Fried, the managing director of FTX, stated that they were open to assisting any market participant who may be struggling at this time because they wanted it to remain functional.