The Crypto Bailouts Have Begun. Is This the Only Way?

FTX CEO Sam Bankman Fried was compared to John Pierre Pont Morgan (his own, not the bank) as he rushed to rescue a sick crypto company during the current crash. increase 1907.. His rivals are currently in the spotlight and they want to take part in the bailout race.

Last month, FTX $ 250 million credit line To the tattered crypto lender BlockFi. The next day, another SBF company, Alameda Research, gave Voyager Digital a $ 500 million loan facility. Two weeks later, FTX Agreed reached Get BlockFi completely. SBF Reportedly Away from giving similar rescue to Celsius.And he said Reuters Last week, FTX still said “Billions“To help another company with one foot in the grave.

It’s not about magnitude and it’s hard to see it as positive for the crypto industry.

For Voyager, Alameda is already known Voyager rented $ 377 million. We rarely see borrowers bail out lenders. Binance CEO CZ Criticized Voyager’s salvationPlease tell me in the next interview gm podcast“I never make such a deal. I never say.’I invest in your company and then you lend me some money.'” I tell that company I’m not going to invest, I keep my money. “

fair enough. But CZ clearly wants a bailout jackpot. “We are considering a lot of transactions,” he said in the cryptocurrency liquidity crisis. “Some of them are actually good deals, so you’ll find that we invest, bail out, and save on multiple projects.”

Never miss a press opportunity, Tron CEO Justin Sun Said block He said he was ready to pay $ 5 billion to help the sick crypto company.

cool. But these bailouts do not hit me as a healthy path from the current recession in the crypto market. (Supplement: Is it fair and accurate to call these financial lifelines “bailout”? I think so, but some disagree.)

Celsius, BlockFi, Voyager, and other crypto lenders who promised high yields on user deposits were always visible Too good to think of reality, And they were. They had a delusional business model that envisioned an “up-only” market environment. Are they worthy of being saved?

To be fair, as CZ pointed out, users of companies that hold funds are better off buying than closing. “This means that users won’t lose money, and hopefully less money,” he told us. He was also hesitant to be ashamed of high-yielding lenders. His view: When the crypto market is booming, as in 2020 and 2021, “What if your project yields only 2% and other projects yield 10%? Guess or you’ll lose users. There’s a flock. Action: If anyone else is doing this, I have to do this to stay competitive. “

But CZ also Blog post On June 23, in an obvious sub-tweet from SBF, he declared, “Don’t make a bad company permanent. Let it fail.”

I like the idea. I tend to think that the current Crypto Winter will wash away weak, flyby night players and strong companies and projects will survive. Wheat separates from rice husks.

But if the CZ now jumps in and starts bailout on its own, the CZ is completely inconsistent.

this is Editor’s nodeRegular weekend columns from Editor-in-chief Daniel Roberts.. Read the previous edition: Two NFT Party Stories: Doodles and Goblintown..

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