Crypto billionaire Sam Bankman-Fried says more exchanges will fail as the industry faces a brutal downturn
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- FTX CEO Sam Bankman-Fried said we'll see more failed crypto exchanges.
- The billionaire told Forbes that some are already "secretly insolvent" and are past saving.
- FTX has extended credit to some struggling companies amid a brutal downturn in the market.
Crypto giant FTX may be bailing out some digital asset platforms during the ongoing crypto winter, but its CEO says not all of them will make it.
Sam Bankman-Fried, who heads up one of the world's largest cryptocurrency exchanges, told Forbes we'll likely seeing see more crypto exchanges failing.
"There are some third-tier exchanges that are already secretly insolvent," he told the magazine, declining to detail exactly which ones.
FTX has cast out credit lines worth $750 million to exchanges Voyager Digital and BlockFi that have struggled amid the market rout, a collapse in the stablecoin Luna, and failure of the crypto hedge fund Three Arrows Capital.
As Forbes notes, Bankman-Fried's bailouts may be an attempt to "buy the dip" and help save the entire industry, since the success of FTX and other exchanges depends on the health of the broader crypto market.
But as much as FTX is lending a safety net to some in the space, he told the outlet that many are way past saving.
"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, who's worth an estimated $20 billion, said.
Alongside a broader economic downturn has been a major crypto crash this year, with market giants bitcoin and ether taking rough hits. The crisis has sent the entire value of the cryptocurrency market plummeting below $1 trillion for the first time since early 2021.
Major companies are laying off staff, including exchange giant Coinbase, which let go of 1,100 people and rescinded job offers.
Other companies have been forced to freeze withdrawals.
Crypto lending platform giant Celsius Network froze withdrawals earlier this month, citing the "extreme market conditions." Customers whose holdings were trapped on the platform previously told Insider that they have no idea what will happen to their money. Babel Finance similarly froze withdrawals.
"It's the smaller customers like me that this could wipe out," one said.