FTX founder/CEO Sam Bankman-Fried (SBF) recently appeared in an exclusive interview with CNN to talk about the current situation of the market and FTX’s own expansion plans. The host Julia Chatterley even jokingly asked whether SBF was going to acquire Coinbase.
SBF was recently interviewed on CNN’s First Move, a program devoted to global business, economics and finance. The topics discussed in this interview include the current situation of the crypto market, market rumors of FTX acquisition, why we should assist troubled crypto institutions, and expansion plans.
Julia Chatterley started by asking about the current state of the crypto market:
I think while it’s painful and challenging for the crypto industry right now, isn’t it also seeing some level of “health”?
SBF believes that the crypto market is moving towards a healthy situation. Some institutions and capital have been overdeveloped in the past two years, and now the market is liquidating these excessive leverage and weeding out companies with questionable capital adequacy.
After a certain point, you start to see even well-capitalized players having problems, and I don’t think the market is unhealthy anymore.
Now the market is liquidating these excess leverage, washing out some players with questionable balance sheets, and I think in a way that’s healthy for the market.
SBF in an interview with Reuters also expressed a similar view
He pointed out that the market liquidation of excessive leverage can cause a liquidity crunch, and the worst of the liquidity crunch is over, and the current market price stabilization seems to prove this. However, this does not mean that the bear market is over, and the future trend still depends on the impact of the overall economy.
Lending platform BlockFi recently secured a $250 million revolving credit line from FTX, and SBF has previously expressed his willingness to lend money to other companies, setting a stop-loss line for this liquidation crisis.
In this regard, Julia Chatterley asked:
I dare say that every day now there are people knocking on your door and shouting, “Hey, are you going to invest in us?”.
So you have to pick out the poor, unprofitable, or even insolvent companies from these companies, right?
SBF said that lending to these businesses is not charitable and must be assessed carefully. And FTX’s standard is to look for companies that “do well in business.” These companies are just having a temporary liquidity problem, so as long as some loans are provided, users of these companies can be protected and a systemic crisis can be prevented in advance.
What you said is to the point, this (selecting companies) is indeed what we are doing, that is to say, lending money to these companies is not just bailouts. Some of the companies we studied were destined to go bankrupt, and it was right for them to declare bankruptcy.
The key to our selection of companies are those with good business performance. Because these loans are just a way to provide their liquidity in the short and medium term.
At the same time, SBF also clarified some market rumors. He said that in addition to the company’s good health, the most important thing is to protect the users of these good companies, so the mining machine/mining industry is not being actively considered by FTX.
Rumors that FTX will bail out miners have been hot recently, which is understandable as this is one of the major industries in the crypto space.
But what I want to say is that we have no interest in the field of mining machines. There are no users in this area that need to be protected, because everyone can buy mining machines to fill up the computing power, this is not an area with systemic risk.
According to SEC official documents , SBF purchased 56 million Robinhood shares last (May), making it the company’s third-largest shareholder. Although SBF denies that FTX has acquisition intentions, it can not help but lead to imagination.
SBF clarifies that this is a pure investment. He has great respect for Robinhood founder Vlad Tenev and the entire team, and has not had any active discussions about the acquisition, but doesn’t deny that there are other opportunities.
Julia Chatterley thinks it makes sense to buy a stake at the low point and asks:
People are very interested in your investment in Robinhood, do you have other people you want to invest in?
Maybe we can also put (invest) Coinbase into the discussion?
SBF immediately denied buying Coinbase with a smile.
He pointed out that FTX is currently operating very well, so whether it is Robinhood or other companies, there is no need to rashly acquire them and put themselves in an unfamiliar operating environment. But he also said that he is happy to cooperate with different companies.
Answering this question runs the risk of rumors stoking, so I’m not going to open this thread.
But I would say that we have the possibility to cooperate with any company.
Coinbase reported Q1 earnings last month, with a net loss of $430 million after revenue halved and expenses increased.
Is FTX’s trading business profitable during this turbulent market?
Because I think it is also a time when profitability can be used to distinguish good companies, ordinary companies, and bad companies.
The answer is yes. SBF said that FTX has been profitable for several consecutive seasons, including the last few seasons. He believes that the key is “stable expansion.”
Yes, we did, and we’ve been profitable for some time, including in recent quarters.
I think the key to sustainable profitability is to grow steadily. Of course, I’m not saying that expansion is wrong, especially when it’s the right time and place, but expansion is undoubtedly a risky decision, and it puts oneself in a passive and vulnerable situation. So unless we see a great opportunity and invest in a way we like, I’m not going to expand easily.
SBF specifically mentioned the expansion of personnel. He has previously stated that although expansion in a bull market is reasonable, he found after research that when a company expands at a high speed, it will make it difficult to coordinate between departments, and it will also lower employment standards. The consequence is that among colleagues Communication becomes bad, and in the end no one wants to communicate, even if there is a reward system.