FTX is building $1 billion war chest to buy up distressed crypto and other assets
CEO and co-founder of major cryptocurrency exchange FTX Sam Bankman-Fried (SBF) has revealed that the company has built an estimated $1 billion war chest to continue deploying capital to rescue distressed crypto firms and buy their assets.
In an interview with CNBC, he declined to give the specific amount so as not to sound too confident about the answer, but noted that FTX is still within its comfort zone in the amount of funds it is willing to spend without emptying its coffers.
“You have the question of ‘how much do we feel comfortable deploying.’ Saying there’s another half a billion here that’s completely unencumbered would get you within a factor of certain of the correct answer,” SBF said when they was pressed on how much more FTX had to distribute.
SBF further highlighted that when FTX entered the bear market, FTX had a couple of billion of its own funds, added funds it obtained from venture capital and profits it has earned this year and from last year as well.
Meanwhile, the 30-year-old billionaire continues to maintain that his company’s philosophy is guided by the need to both protect consumers, as well as stop contagion from spreading across the crypto ecosystem due to the failure of an asset or firm. He believes that in the long term this will be good for customers, regulations and the ecosystem in general.
FTX’s rescue activities have produced mixed results so far
The Bahamas-headquartered exchange has developed bailout deals worth an estimated $1 billion in the crypto industry this year. According to a Bloomberg report, some of these deals have already performed poorly, while the performance of others shows promising signs.
In the report, SBF noted a $485 million loan made to Voyager Digital Ltd. as a potentially sour deal as the amount had not been enough to prevent the company from filing for bankruptcy in July. By contrast, the $400 million revolving credit bailout given to BlockFi, another troubled crypto lender, showed signs of being effective.
SBF is not disturbed by the possible results, as he says that FTX is not extending its support to only make money on each deal, but to meet the need for capital in the market.
FTX reached a market capitalization of around $32 billion after a Series C funding round it completed in January as reported by CNBC. Regardless, the exchange has continued to explore ways to diversify its revenue stream away from just crypto fees amid the market turmoil.
