Sam Bankman-Fried rescues crypto industry, again


Sam Bankman-Fried by Virgile Simon Bertrand for Forbes_Sam5253_Color

Sam Bankman-Fried of FTX photographed in March 2021 by Virgile Simon Bertrand for Forbes.

Virgile Simon Bertrand

Sam Bankman-Fried has again proved himself to be the saviour of the crypto world this week as he won the auction for embattled brokerage Voyager Digital’s assets.

The second-youngest billionaire (after his FTX cofounder Gary Wang) is no stranger to swooping in with credit lines and bailouts to ease the woes of some of this year’s most troubled companies. It’s not surprising, then, that the 30-year-old has been compared to J.P. Morgan during the crisis of 1907.

Bankman-Fried’s rescues started at the end of last year, as FTX provided a US$120 million line of credit to Liquid after hackers stole from the Japanese exchange. FTX acquired the exchange in April of this year, though it did not disclose for how much.

As the crypto market faced a deepening liquidity crisis following the crash of the terra and luna tokens in May, Bankman-Fried started handing out lines of credits to seemingly any firm that was on the brink of collapse, totalling around US$750 million between FTX and his quantitative-research firm Alameda.

In late June, as crypto wealth manager BlockFi laid off 20% of its staff and was seeking to raise capital at a decreased valuation, Bankman-Fried’s FTX US provided a US$250 million revolving credit facility. By July, when the crypto market fell below 2021 levels for the first time, the credit line was extended to US$400 million alongside the option to be acquired by FTX US for up to US$240 million.

Alameda Research, the quantitative research firm owned by the same holding company that owns FTX.US, joined the seemingly benevolent spree, handing Voyager a US$200 million cash and USD coin and 15,000 bitcoin credit line after defunct crypto hedge fund Three Arrows Capital (3AC) defaulted on a loan, worth at the time US$675 million.

After Voyager filed for chapter 11 bankruptcy in early July, Bankman-Fried initially made an offer to the crypto brokerage for its customers. FTX.US would buy all of Voyager’s digital assets and customers would then be able to open FTX accounts with a portion of their bankruptcy claims. Voyager initially dismissed FTX’s offer, saying that “no customer would be made whole” under the plan.

But the plan the brokerage accepted today does not look much different. His winning bid of US$1.422 billion for the brokerage’s crypto assets included US1.3 billion for current market value of the currencies themselves and an additional US$111 million of “incremental value.” The 8% premium also landed FTX access to Voyager’s clients—a spokesperson tells Forbes that “the money will effectively go to the customers, as opposed to the company/management.”

Alameda Research, which initially gave Voyager the credit line and was listed as a creditor in the filing, still has an outstanding payment to Voyager, even as FTX.US buys its crypto assets. A New York court ordered the research firm to repay the US$200 million crypto loan it sought in September 2021 by the end of this month.

One notorious crypto failure not under Bankman-Fried’s wings? Celsius Network. FTX passed up a deal with the beleaguered crypto lender after seeing its finances, the Block reported . Celsius CEO Alex Mashinsky resigned today, effective immediately.

All those bailouts, however, may be a distraction from FTX’s own woes. FTX US president Brian Harrison said he would be stepping down, leaving the US crypto trading arm of the exchange. While neither Harrison nor Bankman-Fried addressed the reason for his departure, a decrease in unique visitors to the site may be to blame.

FTX.US unique visitor volume underperformed other US exchanges, with visitors falling 42% since April of this year. Coinbase, Gemini and Binance US saw visitor decreases in the range of 22-27% in the same time frame.