The Founder and CEO of the crypto exchange FTX – Sam Bankman-Fried – thinks large companies like his should use their expertise and “stem contagion” in the digital asset market. As such, they could aid the ecosystem to thrive again, he added.
In addition, the American argued that the Federal Reserve and its controversial approach to tackling high inflation is the main reason financial markets (including crypto) have plummeted recently.
The Big Players Should Not Stand Aside
One of the most influential people in the crypto space – Sam Bankman-Fried – opined that crises in the sector like the ongoing situation could be solved with the help of the leading companies. In fact, he believes they need to dive into the issue even if it leads to short-term losses:
“I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion. Even if we weren’t the ones who caused it or weren’t involved in it. I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive.”
Bankman-Fried reminded that FTX has already provided help on similar occasions. Last year, wrongdoers hacked the Japanese exchange Liquid and stole around $100 million worth of digital assets. Shortly after, FTX provided a $120 million in financing so the company could get back on its feet:
“We, I think about 24 hours later, stepped in and gave them a pretty broad line of credit to be able to cover all of their demands, to make sure customers were made whole while thinking about the longer-term solution.”
The Fed Drove This Crash
FTX’s CEO also gave his explanation of why the cryptocurrency market collapsed so heavily during the past weeks. In his view, “the core driver of this has been the Fed,” which has been tackling the galloping inflation by raising interest rates. According to Bankman-Fried, this has led to a “recalibration” of risk expectations.
Last week, the central bank of the USA announced an interest rate hike of 75 basis points, the largest since 1994. Despite pumping briefly after the news, bitcoin’s price went on a massive downturn in the following days. During the weekend, it even dipped below $18K (a level unseen in the past 18 months).
“Literally, markets are scared. People with money are scared,” Bankman-Fried commented on the consequences of the collapse.
Featured Image Courtesy of Forbes