(Article republished from QuothTheRaven.Substack.com)
As of just hours ago, it looks as though I am right about more blowups coming in the sector - and the confirmation came from the man who would know about it best.
In a late Tuesday night interview published by Forbes, crypto-billionaire Sam Bankman-Fried made the admission that “there are some third-tier exchanges that are already secretly insolvent.”
In other words, they’ve already failed, we just haven’t heard about it yet.
Forbes came away from their interview with Bankman-Fried drawing the conclusion that the “fallout is far from complete” in the space.
And Bankman-Fried would know - he has been the go-to guy for crypto firms seeking a bailout thanks to bitcoin’s move from over $60,000 to where it stands today, at about $20,000.
But there’s companies even he won’t bail out. He told Forbes:
“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.”
The article continued:
Bankman Fried is worried about continued failures because during the euphoria of rising crypto prices, exchanges kept upping the ante to attract customers with generous yields for deposits.
I have been saying for a long time that there was a lot of leverage that needed to be liquidated and a lot of malinvestment that needed to be taken out to the woodshed in the crypto space. That thesis hasn’t changed at all.
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