FTX boss Sam Bankman-Fried has bailed out struggling crypto lender BlockFi with a $250 million loan
FTX's Sam Bankman-Friedhas provided a $250 million loan to bail out cryptolender BlockFi.
- The crypto billionaire also loaned broker
Voyager Digital$485 million in cash and bitcoinlast week.
FTX's Sam Bankman-Fried has provided a $250 million loan to bail out struggling crypto lender BlockFi, as digital asset companies continue to reel from the ongoing market crash.
Crypto billionaire Bankman-Fried has stepped in to shore up BlockFi's balance sheet - just one week after lending the brokerage Voyager Digital $485 million in cash and bitcoin.
"Today we're injecting $250 million into BlockFi and partnering with them so they can navigate the market from a position of strength," Bankman-Fried announced Tuesday. "BlockFi is financially strong; all operations are normal, as they always have been, and assets are safe."
Major lender Celsius announced it was freezing all withdrawals, and BlockFi and Voyager have both suffered significant losses as major cryptocurrencies plunged.
There's also been renewed scrutiny of Michael Saylor's MicroStrategy - which reportedly faces a margin call on a bitcoin-backed loan if the token drops below $21,000. Bitcoin was trading at $20,544 Wednesday.
Bankman-Fried's bailouts show that he's now positioning himself as crypto's lender of last resort, analysts said. SkyBridge Capital's Anthony Scaramucci compared him to investment banker J.P. Morgan, who built his influence by bailing out several major New York banks in 1907.
"Sam Bankman-Fried is the new John Pierpont Morgan," Scaramucci told Bloomberg. "He is bailing out cryptocurrency
"[Bankman-Fried is] a respected industry player supporting a systemically important firm with capital at a time where they think the bottom could be in, or close," Tom Dunleavy, a senior research analyst at Messari Crypto, added.
But some regulators have opposed bailouts. They argue that the ongoing "crypto winter" will benefit the space in the long-term by flushing out weaker companies.
"Crypto does not have a bailout mechanism," SEC commissioner Hester Pierce told Forbes. "When things are a bit harder in the market, you discover who's actually building something that might last for the long, longer term and what is going to pass away."
Read more: An ex-hedge fund analyst at Steve Cohen's SAC Capital breaks down how bitcoin has failed as an inflation hedge — but explains why it and ether are still a retail investor's best bet in the crypto market
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