Exclusive: Crypto Billionaire Owner of FTX Sees Potential for Deals in LatAm

Sam Bankman-Fried spoke to Bloomberg Línea about his plan to rescue crypto, the need for regulation in the sector, and his interest in Latin America

US crypto billionaire Sam Bankman-Fried, founder and CEO of FTX, has expressed an interest in opening markets in Latin America while advocating for more regulation for cryptocurrencies.
July 20, 2022 | 11:04 AM

New York — US crypto billionaire Sam Bankman-Fried, founder and CEO of FTX, has expressed an interest in opening markets in Latin America while advocating for more regulation for cryptocurrencies, considering that such a move could provide “more institutional confidence in the sector” despite the recent price slump.

“We definitely need more regulation for crypto globally, and especially in the United States, and I really support the initiatives of the SEC and the CFTC in pushing for that,” Bankman-Fried told Bloomberg Línea on the sidelines of the Bloomberg Crypto Summit, this week in New York.

This regulatory framework, the crypto billionaire said, “can help provide more customer protection” and “more institutional confidence in the sector”.

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Bankman-Fried, 30, noted that his cryptocurrency exchange platform FTX has recently focused on regulatory matters, particularly Commodity Futures Trading Commission (CFTC) licensing, and has been in “productive discussions” with the Securities and Exchange Commission (SEC).

The California native also has a stake in US financial services firm Robinhood Markets, and in recent days there has been talk of a possible acquisition of that company by FTX.

Bankman-Fried said however that there are no current discussions about an M&A with Robinhood, but added that he is excited to find ways to partner with them, and that  it is “a really compelling investment case.”

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He also said he is open to dialogue in the event that Robinhood seeks to initiate it, but he made it clear that FTX’s focus now is more on passive investing.

The plan to rescue cryptocurrencies

Amid declines in the value of major cryptocurrencies, Bankman-Fried has been standing ready to support companies in the sector that “potentially need capital or bailouts” to weather the so-called crypto winter.

According to the entrepreneur, who plans to allocate part of his fortune to contain the current fall in prices by pumping capital into companies in crisis, as he has already done with BlockFi Inc. and Voyager Digital, this strategy seeks to prevent the spread of the crisis throughout the crypto ecosystem.

With a net worth valued at $11.4 billion, Bankman-Fried is ranked 160th on the Bloomberg Billionaires Index, despite his wealth shrinking by $4.08 billion so far this year.

Regarding how much of his assets he will allocate to containing the current situation, he said that “there’s some flexibility” on this point, and that “it will depend on specific cases”.

“I’m guessing it’s going to be somewhere in the nine figures when all is said and done (…)  and I think that it’s not going to be something where we will be able to backstop every company. You know, some of them frankly are likely too far gone,” he said.

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He added that FTX would like to be able to backstop companies that have “potentially bright futures”

“It’s not just throwing good money after bad, but [where] we are able to effectively secure customer assets there.”

Bearish scenario

Bankman-Fried pointed out that the current crypto winter is a response to several combined events, but that a determining element has been the increase in interest rates.

“There’s obviously a lot of things going on, but I think the biggest [one] is rising interest rates, which has led to a general decrease in risk asset prices in stocks overall, in tech, and in particular in crypto as well,” he said.

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The crypto entrepreneur attributed the main problem faced by the crypto ecosystem to the macroeconomic climate, which includes the war in Ukraine and other factors that have fueled recessionary headwinds in the US.

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He also links these macroeconomic aspects to some factors specific to the crypto market that led to the collapse of cryptocurrency Luna, whose crash has taken a toll on the digital assets space.

The crypto activist declined to offer an opinion on how much longer the crypto winter may last, indicating that a lot of this will depend on when the market ceases to respond to the new interest rates and instead begins to play to already existing expectations.

Still, he believes a stabilization phase is underway, but that this scenario will depend on interest rate prospects after the US Federal Reserve made the largest rate increase in almost 30 years to a range of between 1.5% and 1.75%.

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Crypto layoffs

The crypto winter brought a wave of layoffs by several startups, and the cryptocurrency segment was no exception, with cases in Latin America such as Argentina’s Buenbit and  Mexico’s Bitso.

Bankman-Fried conceded that it is clear that this trend is already occurring as businesses in the crypto world begin to downsize, and that this is likely to continue, especially “in companies that were on an unsustainable trajectory beforehand”.

“I think that’s gonna have a significant impact on the features of those companies (…) We’re moving toward a world in which sustainable economic business practices are more highly emphasized, which I think is also quite healthy,” he said.

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This shift in outlook implies, among other things, that companies operate on a larger scale and without the pressure to increase their workforce, aiming for more conservative growth, he added.

Latin America

The reach of Bahamas-based FTX, with a valuation of $32 billion, has led it to explore different business alternatives, and Bankman-Fried confirmed that the company has held some conversations in Latin America.

“We’ve been having conversations,” he said. “I don’t think there’s anything concrete right now, but we would love to do so, and we have been talking to potential partners and in Latin America as well.”

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He said FTX has been looking at how regulated offerings would look in Brazil and Mexico and other markets, though he stressed that no merger or acquisition is under consideration so far, but did not rule out a possible deal in the future.

“I would not be surprised if we ended up doing one, although again, I don’t think there is any. There are no particular ones that I’m currently aware of that that we are looking at.”

The crypto billionaire highlighted that regions such as Latin America are showing not only a greater adoption of cryptocurrencies, but also greater demand, especially in terms of remittances.

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“I think that volume is just going to increase over time, and that we’re going to see more and more adoption coming from remittances in Latin America, and that it is going to start to be used for payments as well,” he said.

Some of this flow, he said, could also come by way of a “native cryptocurrenc,y and some of this is probably going to be stablecoins backed by their fiat currencies.”

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