Cryptocurrency Bailouts Commence; Are They the Only Resort?

The chief executive officer of FTX, Sam Bankman, is being compared to John Morgan. Bankman who has stepped in to save several cryptocurrency companies from collapse due to the current market crash now resembles John Morgan, the man, back in 1907.

In June, FTX prolonged a line of credit worth $250 million (£211 million) to the shattered BlockFi, a cryptocurrency lending company. The same faith was shared by Alameda Research, which extended a line of credit worth $500 million (£422 million) to Voyager Digital. Alameda Research is also an SBF firm. A fortnight later, FTX agreed with BlockFi to purchase BlockFi’s outright. In addition, Bankman said the company still had cash to aid collapsing firms. However, it is reported that SBF refused to give such aid to Celsius.

However, seeing these bailouts as a healthy remedy for the crypto market is pretty challenging.

It was also reported that Alameda Research owed Voyager Digital a total of about $377 million (£318 million). It is not common to witness a spectacle where a lender is helped or bailed out by his borrower. This bailout has, however, received some criticism. One individual is the chief executive officer of Binance. CZ said that he would never commit to a deal where a firm promises to invest in his company and, in turn, borrow some cash. He insisted that he’d rather keep his money.

CZ continued to say that the world witnessed a colossal number of deals in this crypto crash. He said that several of the deals being made are outstanding “deals.” CZ finalised the subject by saying there will have made investments, bailed out dying firms, and saved dozens of projects.

In addition, the chief executive officer of Tron, Justin Sun, confirmed to The Block that he was ready to give out approximately $5 billion to save several dying cryptocurrency companies. However, some individuals remain sceptical about this current move to save the crypto market. They are terming it as an unhealthy path to redemption.

Firms like Celsius and BlockFi were built on a fantasy business model that only believed in eternal progress. These firms promised heaven to their depositors, and they seemed too good to be at some point accurate. Indeed, they weren’t. Are they worth rescuing?

According to CZ, he thinks that it will be less ugly if the companies that owe users cash are acquired rather than die. He said that that would help the users lose little or no money. When speaking with decrypt, CZ was keen not to point fingers at the high-yield crypto lenders. He insisted that a particular herd behaviour existed that makes people take unique steps in the cryptocurrency world to edge their rivals.

However, CZ released a blog in which he said investors should not support “bad” companies. Animatedly he added that investors should let these firms die. The blog, which came out on 23rd June, was a subtweet of SBF.

The current crypto winter will likely eliminate all the uncertainties in the crypto world. It will kill the diminished and weak companies, and at the end of the day, only the substantial firms with robust business models will remain. However, it is crucial to note that if CZ decides to join the bailing out efforts at any point, he will have contradicted himself.

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