Sam Bankman-Fried has bolstered the stumbling $900 billion (€854.4 billion) crypto industry with his second bailout of a struggling digital assets firm in as many weeks.
The 30-year-old chief executive of crypto trading platform FTX has extended a $250 million loan to BlockFi, he announced on Tuesday. Just last week, he also helped crypto broker Voyager Digital to pull back from the brink with a loan that totalled around $485 million in cash and bitcoins.
The moves come as the crypto industry tries to restore confidence during a period of accelerating pressure on the price of digital assets such as bitcoin, which has pushed even some of the biggest market participants in the industry into distress.
One of the key principles of cryptocurrencies is their independence from authorities such as central banks. But billionaire Mr Bankman-Fried is building up a pivotal role akin to the authorities that rescued banks in the 2008 financial crisis.
Janan Ganesh: Elon Musk is wasted in the US – but he might shock Europe into changing its ways
Peter Pan review: Gaiety panto takes off with dizzying ensemble numbers and breathtaking effects
Lebanon ceasefire: ‘We have no windows, no doors but we can live. Not like other people’
Sally Rooney: When are we going to have the courage to stop the climate crisis?
“Sam became a lender of last resort,” said Anatoly Crachilov, chief executive of London fund manager Nickel Digital Asset Management.
The heavy drop in digital asset prices has claimed a growing number of casualties in the last month, including stablecoin terra and its sister token luna, as well as lending platform Celsius, which stopped customers from withdrawing their assets in a bid to survive. Since the all-time high last November, bitcoin has dropped about 70 per cent, and rival token ether has lost roughly four-fifths of its value.
Mr Bankman-Fried added that he considered himself to have an important role in supporting struggling market participants even in cases where FTX is not involved. “I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive,” he tweeted. - Copyright The Financial Times Limited 2022
