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FTX’s Sam Bankman-Fried goes eye-to-eye with regulators
Photographer: Stefani Reynolds/BloombergWelcome to Bloomberg Crypto, our twice-weekly look at Bitcoin, blockchain and more. If someone forwarded this to you, sign up here. In today’s edition, takes a look at the regulation of Big Crypto — or the lack thereof:
Big Crypto’s free-for-all
In any other industry, a powerful player snapping up several companies in a matter of weeks would warrant at least a tap on the shoulder from regulators. But in the Wild West of crypto, some billionaires appear to be doing just that without scrutiny. Are they tempting fate?
Major exchanges like FTX and Binance have pledged to rapidly expand their footprint through mergers and acquisitions during the current bear market, with FTX’s Sam Bankman-Fried (the “new John Pierpont Morgan”) committing about $1 billion to the cause alone. Each rumor of a business on the brink of collapse seemingly uncovers a new connection to crypto royalty, either as an investor, a or even ties through old co-founders
The question is how much further can this free-for-all last before the long reach of a single executive gets stuck under the microscope. Perhaps it’ll be sooner than we think: Under US President Joe Biden’s executive order, antitrust authorities are set to explore how future regulations can “allow maximum competition,” the country’s former Department of Justice Assistant Attorney General Makan Delrahim Bloomberg TV on Monday.
While some deals can be beneficial for innovation, Delrahim said regulators will need to assess every single transaction on its own merit, just as they did during the dot-com boom. “Big in a capitalist system is not bad,” he added. “Big behaving badly is bad.”
Big Tech itself is wrestling with its own stateside crackdown, and historical probes of past deals are not unheard of -- just look at the Federal Trade Commission’s 2020 case against Meta’s acquisitions of Instagram and WhatsApp, which argued the firm was trying to create a social network monopoly. While a degree of consolidation is expected in any market downturn, it’ll be hard to realize crypto’s decentralized utopia if one Supreme Overlord has a finger in all the pies.
Sam Bankman-Fried's Crypto Empire
These are just a few of the notable players tied to SBF
Ed Hindi, chief investment officer at Swiss crypto hedge fund Tyr Capital, said in an interview Monday that this trend of concentration is “going to create emotional negative feedback” among core decentralization believers at some point. “If you look at the traditional finance model, you’ve got maybe five huge companies. You’ve got Google, Microsoft, Apple, Meta; and they own practically the whole world. How is that different to what’s going on in crypto right now?”
Charting it out
High Flying
Coinbase is set for its best weekly jump on record after BlackRock pact
Source: Bloomberg
Hearing them out
What we’re reading (and writing)
- BlackRock Teams Up With COINBASE in Crypto Market Expansion
- Bitcoin Miner Made Millions by Shutting During Texas Heat
- Virginia Pension Fund Considers Investing in Crypto Lending (Financial Times)
- Push to Give CFTC More Sway Over Crypto Trading Gains Steam
- Michael Saylor Bet Billions on Bitcoin and Lost (Wall Street Journal)
- Crypto Takes a New Hit as Thousands of Solana Wallets Are Hacked
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— With assistance by Joanna Ossinger, and Matt Turner
