Submitted by QTR's Fringe Finance
Earlier this month, when crypto firm Celsius collapsed, I wrote an article talking about how the chaos in the “asset class” likely wasn’t over, while also speculating that further scrutiny on the crypto industry, and specifically stablecoins, was on the way.
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.