FTX CEO Sam Bankman-Fried has reportedly spent $1 billion to save the crypto industry from failure. As crypto companies are facing bankruptcy, Bankman-Fried made it his mission to bail them out.
“We want to do what we can to stem contagion, and sometimes that’s going to mean that we try to help out in cases where it’s not enough,” the 30-year-old CEO said.
“If that never happened, I’d feel that we were being way too conservative.”
In recent months, Bitcoin, the world’s largest cryptocurrency, plummeted to nearly 70 percent of its all-time high in November 2021. Most other tokens also saw decreases. The drops have brought the entire crypto market capitalization down, at risk of reaching a new annual low.
Previously, FTX offered a $400 million loan to crypto firm BlockFi to extend its line of credit. The deal also included an option for FTX to buy BlockFi with a $240 million variable, depending on trigger performance. It enabled the lender to restart its operation.
BlockFi CEO Zac Prince said while it was “not the outcome that we were expecting last summer”, the deal was great for the company and its customers, as FTX’s transaction allowed them to maintain customers’ whole deposit.
Bankman-Fried then extended the line of credit for crypto lending firm Voyager through a $70 million deal vias his other company, Alameda Research. However, Voyager declared bankruptcy a few weeks later, causing Alameda to lose investments.
Celsius, another popular crypto lender, reportedly also sought FTX’s aid. However, an FTX representative said the executives did not think the lending company’s situation was “healthy”. Celsius filed for bankruptcy in the middle of July.
Through FTX, Bankman-Fried also acquired two crypto exchanges, Liquid in Japan and Bitvo in Canada. FTX also extended investments in the non-crypto industry, such as IEX. With his personal fund, Bankman-Fried also invested in Robinhood Markets.
Bankman-Fried said most of the problems were “already flushed out of the system” after the value of Bitcoin stabilized at around $21,000.
FTX has grown steadily into an “empire” since its establishment in 2019. The crypto exchange accommodates retail users to purchase or sell cryptocurrencies, taking a small fee for each transaction.
Per CoinGecko, the exchange’s daily average trade volume is around $9.4 billion, making them the third largest in the world. The company’s revenue was recorded at $1.02 billion last year, with a net income of $388 million.
Bankman-Fried told the media he aimed to turn FTX into a “financial supermarket” that offers various crypto services, such as loans, trades, and retail payments.
The executive said, “The idea generating this is, ‘What do you actually want to do with your money, as the typical consumer? What are the things that are actually valuable for your day-to-day life?’”
In addition to expanding his company, Bankman-Fried is also an active advocate for the crypto industry.
“He has had to transition from talking to a purely crypto audience to dealing with lawmakers, journalists, and the public,” Chris McCain, a long-time investor at FTX, said.
“In 2019 he didn’t have a lot of those skill sets. He was much more of a shy, quirky, geeky person.”