Axios Pro Exclusive Content

FTX CEO Sam Bankman-Fried working to curtail crypto contagion

Ryan Lawler
Jun 21, 2022
FTX CEO Sam Bankman-Fried

FTX CEO Sam Bankman-Fried. Photo: Sarah Silbiger/Bloomberg via Getty Images

Sam Bankman-Fried is helping to shore up the balance sheets of some of the biggest crypto firms in the world, providing financing to BlockFi and Voyager Digital through his firms FTX and Alameda Research.

Why it matters: The crypto world isn't as decentralized as most would like to believe, as the collapse of Luna helped to bring down Three Arrows Capital, which subsequently led to a liquidity crunch at companies like Celsius and Babel Finance.

  • By acting as a white knight, the FTX CEO is seeking to head off any further contagion that could collapse the broader crypto industry.

Details: On Friday, crypto brokerage Voyager Digital (TSX: VOYG) signed a non-binding term sheet with Alameda Research for two revolving lines of credit.

  • The first is a cash/USDC-based credit facility with an aggregate principal amount of $200 million.
  • The second credit facility is for 15,000 in bitcoin, worth about $315 million at today's price.
  • In addition, Voyager said it has more than US$200 million on its balance sheet.

Subsequently, BlockFi announced Tuesday morning that it signed a term sheet with FTX for a $250 million revolving line of credit.

  • BlockFi said the credit facility is intended to be contractually subordinate to all client balances and will be used to bolster the company's balance sheet.

Context: The agreements come at a time when crypto lenders Celsius Network and Babel Finance have both suspended customer withdrawals while trying to shore up liquidity.

Flashback: This isn't the first time Bankman-Fried's companies have provided financing to another member of the crypto ecosystem.

  • Last August, FTX loaned $120 million to Liquid Global after the Japanese crypto exchange lost $90 million in a hack.
  • FTX later acquired Liquid and all of its subsidiaries in a push to launch licensed operations in Japan.

What they're saying: In an interview with NPR over the weekend, Bankman-Fried said: "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."
Go deeper