Yueqi Yang
Sam Bankman-Fried, the crypto billionaire who tried to bail out ailing firms during the industry’s implosion, said the turmoil has prompted investors to link valuations to profitability rather than just revenue.
“Profitability was sort of a dirty word for a number of years, and it has returned to investor parlance,” Bankman-Fried, who co-founded crypto exchange FTX, said at the Bloomberg Crypto Summit Tuesday. “There’s been a substantial re-rating toward looking for at least likely or plausible pathway toward profitability being a core component of an investment thesis.”
The crypto winter -- as it became known -- helped single out firms that could outlast the volatility, he said. He noted exchanges and some blockchain networks with superior properties survived, while many other crypto projects that people would forget ever existed “have generally sort of gone away.”
Bankman-Fried has positioned himself as a lender of last resort in the industry amid a collapse in prices that prompted a number of firms to seek rescue. His crypto exchange FTX US injected capital into BlockFi Inc. with an option to purchase the crypto lender, while his trading firm, Alameda Research, provided credit lines to Voyager Digital, which later filed for bankruptcy protection.
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“It’s ok to do a deal that’s moderately bad” in bailing out a company, with the goal to keep the ecosystem healthy, he said. Some companies he had talks with on bailouts didn’t know or couldn’t be transparent about numbers on their own balance sheets, he said.
FTX keeps its treasury in dollars but could in theory buy Bitcoin if it drops enough, he said, but “we didn’t hit that price.”
On Three Arrows Capital, the crypto hedge fund that was ordered to liquidate, Bankman-Fried said “their trading was probably more like punting than arbitrage making.” It’s not that their positions were illiquid, they just lost their money, he said.
