One of the most crypto-friendly members within Securities and Exchange Commission (SEC), the US regulator, claimed that the bear market could increase the sustainability of the industry – and said that it would not save fighting crypto companies, even if it could.
During an interview with Forbes, the SEC Commissioner, Hester Peircesaid the lack of a rescue mechanism “has been seen as one of the strengths of this market.”
“Even if we had the authority to save you, I would not use that authority. We really have to let these events unfold.”
Peirce, known in space as “Crypto Mom” for his relatively pro-industrial stance on regulation, argued that “when things get a little tougher on the market, it’s easier” to identify what really builds in the long run . “
Ms. Peirce added that both industry players and the SEC could learn a lot from the recent crisis. She argued that the slowdown would be “useful” in allowing observers to “see connection points”. The commissioner called the autumn a learning moment “not only for market participants” but also for regulators, “so we can get a better idea of how the market works.”
Meanwhile, Mrs Peirce also issued a few warning words to those trying to navigate the bear market. She said some opportunistic criminals would seek to target vulnerable investors, explaining:
“Scammers and scammers will find ways to take advantage of all market conditions, so I’m sure their tactics change, and sometimes they prey on people who are down …”
FTX to the rescue
While Peirce seems keen to let less competitive projects fail if they can not withstand the pressures of a market crash, not everyone agrees that the “sink or swim” policy is beneficial in all cases.
After learning that the crypto lender BlockFi may, in turn, fall victim to hedge fund problems Three Arrows Capital (3AC)the crypto exchange FTX stepped in by offering a “$ 250 million revolving credit facility”.
On Twitter, CEO of FTX, Sam Bankman-Friedexplained that the exchange had supported BlockFi so that the latter can “navigate the market from a position of strength”.
He also said that BlockFi is “financially sound” and that all its “operations are normal as they always have been and the assets are secure.”
He wrote that BlockFi eliminated “inconvenient counterparties” before “they became a problem” and properly “added liquidity” to its operations, “before it was necessary.”
And the FTX boss suggested that the bigger fish should understand the risk of letting strong players sink. He wrote :
“We take our duty to protect the digital asset ecosystem and its customers seriously.”
And it’s not just BlockFi: Alameda Researchthe parent company of FTX, has provided a credit line of $ 200 million (cash and USDC) and a revolving facility of 15,000 BTC to the crypto exchange Travel digitallyreported Bloomberg.
Anthony Scaramuccithe founder of SkyBridge capitalallegedly said that
“Sam Bankman-Fried is the new one John Pierpont Morgan – it saves crypto markets like the first JPMorgan did after the 1907 crash. “
Scaramucci refers to the panic of the banks in 1907, which led to the creation of Federal Reserve System.
Bankman-Peace’s financing of these companies is “a respected player in the industry who supports a systemically important company with capital at a time when it believes the bottom can be at or close to,” according to Tom Dunleavysenior research analyst at the crypto data company Messarinoting that this gesture could also be compared to the support provided by warren buffett on Goldman Sachs in 2008.
Likewise, Noel Hébertdirector of credit research at Bloomberg Intelligence, argued that the situation “is no different than private equity firms pouring more capital into distressed portfolio companies” – and that may or may not be enough.
Jeff Dormaninvestment director of the asset management company Arca, allegedly said that last weekend was “crucial” to finding “white knights who could help develop an offer to stabilize this market”, arguing that it “does not require a lot of capital in this time to support rates and failing lenders “. That said, many players have an incentive to ensure the sector does not go bankrupt, he added.
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