Crypto Exchange FTX Has 'Billions' to Support Industry - Bankman-Fried

 In this undated handout image obtained by Reuters on July 5, 2022, FTX CEO Sam Bankman-Fried is photographed at an unspecified location. FTX/handout via REUTERS.

July 6 (Reuters) - Sam Bankman-Fried, head of FTX, one of the largest cryptocurrency exchanges, said he and his company still have "billions" on hand to back what could further disrupt the digital asset industry Stable distressed companies, but the worst of the liquidity crisis may be over.

Bankman-Fried, 30, from California but living in the Bahamas, where FTX is located, has become a white knight for cryptocurrencies in recent weeks, laying down a lifeline for the faltering digital asset platform as cryptocurrency prices tumbled. Bitcoin is down about 70% from its all-time high of nearly $69,000 in November.

"We started getting more companies to approach us," Bankman-Fried said in an interview. While some smaller cryptocurrency exchanges may still fail, the companies are generally not doing badly, he said, adding that the industry has surpassed “other big steps to give up.”

Bankman-Fried's cryptocurrency trading firm Alameda Research has extended a $200 million cash and stablecoin revolving credit line and a bitcoin line to cryptocurrency lender Voyager Digital (VOYG.TO) as the firm suffers from cryptocurrency hedge fund Three Arrows loss of capital. Voyager filed for bankruptcy protection on Wednesday.

Also in June, FTX extended a $250 million revolving line of credit to U.S. cryptocurrency lender BlockFi, and on Friday announced a deal that gave FTX the right to buy it based on certain performance triggers.

The goal of the bailout, Bankman-Fried said, is to protect customers' assets and prevent contagion from bouncing back through the system.

"It's very important for consumers to trust that things will work as advertised, and when it breaks, it's hard to recover," he said.

In January, FTX launched FTX Ventures, a $2 billion venture capital fund focused on investing in digital assets, which has since been used to bail out companies that lack cash but have no assets.

"Each one is getting more expensive," Bankman-Fried said, adding that the company still has enough cash on hand to complete a $2 billion deal if necessary.

"If we count just one event, we can get over billions," he said, stressing that this is not his preference.

Bankman-Fried, who has made billions of dollars arbitraging cryptocurrency prices in Asia since 2017, has said once or twice that he backs failing crypto companies with his own money when FTX makes no sense to do so.

“FTX has shareholders and we have a responsibility to do the sensible thing from them, and I would certainly prefer to burn my own money,” he said.

Bankman-Fried also announced in May that he personally took a 7.6% stake in Robinhood Markets Inc (HOOD.O) to take advantage of the trading app's weak share price.

Forbes estimated Bankman-Fried’s net worth at around $24 billion this year, but Bloomberg’s Billionaires Index said in May that number had halved due to the cryptocurrency crash.

Investors fled the crypto market as the U.S. Federal Reserve began aggressively raising interest rates to combat hyperinflation.

Bankman-Fried, a 2014 MIT graduate student, said the cryptocurrency price slump known as the "crypto winter" could bottom out as prices stabilize, but much depends on macroeconomic conditions.

"I don't think it's an existential threat to the industry, but I think it's a bit worse than I expected," Bankman-Fried said.

Bankman-Fried started his financial career at quantitative trading firm Jane Street, then founded cryptocurrency trading firm Alameda Research, and in 2019 founded FTX, which was valued at $32 billion as of January.

He has announced that he will give away 99% of his wealth and has the ability to spend up to $100 million in support of candidates through the 2024 election cycle, focusing on issues such as pandemic prevention and bipartisanship.

While competing cryptocurrency exchanges face layoffs following previous hiring attempts, FTX has about 300 employees, while Crunchbase estimates Alameda has fewer than 50 employees.

"I expect every quarter of this year we will have an increase in our headcount compared to the previous quarter, but we are trying to avoid rapid growth," he said.

💌 Resources and references: reuters.com 🔊 Crypto exchange FTX has 'billions' to support industry - Bankman-Fried..