FTX CEO Sam Bankman-Fried is taking a bullish stance amid the “great depression” of cryptocurrency.
Instead of joining the list of peers hedging losses by slashing workforces by upwards of 20%, FTX is on a mergers and acquisitions tear, acquiring three firms this year alone.
The fourth acquisition would’ve been crypto lending firm Celsius Network. Bankman-Fried reportedly approached Celsius in a deal to take control of Celsius but walked away after examining the finances.
Here’s a bit of background on why FTX approached Celsius in the first place: By staking the stETH token, Celsius guarantees high yield returns on consumer deposits. StETH enables users to stake money on the Ethereum ETH/USD blockchain and receive additional returns via DeFi.
May saw a dramatic decline in the value of cryptocurrency assets, which resulted in stETH trading at a discount and increased illiquidity.
In an apparent attempt to prevent the virtual equivalent of a banking collapse, Celsius stated on June 12 that withdrawals were being suspended due to "extreme market conditions."
According to a report from The Block on Monday, Celsius' attorneys have been advising the company to file for Chapter 11 bankruptcy, meaning the business can restructure its debt and obligations while still operating. This is possibly where FTX comes in.
FTX recently provided $750 million in revolving credit facilities to two well-known platforms, Voyager Digital and BlockFi, to contain the spread of the liquidity problem.
Unfortunately for Celsius, FTX will not proceed with the transaction after realizing Celsius' balance sheet has a $2 billion hole.
After initially exploring the provision of financial support or an outright takeover, the cryptocurrency exchange "found the company difficult to deal with."
Photo: Sam Bankman-Fried via YouTube
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