Bankman-Fried: Rescue market is drying up, and we’re all to blame for its existence

October 12, 2022 Coin Telegraph

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The crypto billionaire said he would look at Celsius, but he saw little left to rescue otherwise; the mess is the price of inaction on the part of regulators and the industry.

FTX head Sam Bankman-Fried said that he will take a look at Celsius, but he does not see a lot more to do on the “rescue market.” He hoped FTX will be able to start returning the money left in Voyager to investors soon. FTX bought Voyager assets at auction after the company spurned his buyout bid.

“I’m sure there’s something we haven’t seen yet, but there isn’t a whole lot out there that we’re aware of. There aren’t big things,” Bankman-Fried said of the so-called rescue market, speaking at DC FinTech Week on Oct. 11. “There are larger bankruptcies getting started that we may or may not end up playing a role in, but I think we’ve made most of the moves we anticipated making for now.”

FTX was remaining engaged with the market in any case. The company will “look at if it is efficient in terms of the amount we can parts of the industry relative to the amount of balance sheet that we would spend on it,” Bankman-Fried said.

Tune in at 2:30 as CNBC's Kate Rooney and Sam Bankman-Fried about liquidity in distressed markets. https://t.co/MnAn9uQO7A @SBF_FTX @GtownLawIIEL #DCFintechWeek #derivatives pic.twitter.com/vjDhfye455
— The IFM (@The_IFM) October 11, 2022

Bankman-Fried was noncommittal about bankrupt crypto lending company Celsius. “As in most of those cases, we’ll almost certainly take a look. […] I don’t know if that will ultimately mean that we’ll do something there or not.” He was more upbeat when talking about Voyager however, saying he hopes to start returning money to investors soon.

Bankman-Fried said there was sufficient blame for the crypto winter to spread around:

“My biggest takeaway from the regulatory side is there’s a price of inaction. It was a collective inaction. […] Everyone, including our industry, has some role to play and blame in not being more productive and constructive on regulatory matters earlier.”

“At the very least there should have been more transparency,” he added, as many investors were blindsided by the string of bankruptcies in crypto.

Bankman-Fried said, “People ask if it makes sense for FTX to be such a large fraction of this, and I think my answer is no. I would much rather that it was more distributed,” but “you have to sort of take what you’re given.”

FTX reportedly considers bailing out Celsius via asset bid

September 28, 2022 Coin Telegraph

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Acquiring the assets of Celsius would imply FTX’s intent to save the lending firm, similar to what FTX US did for Voyager by securing the winning bid of approximately $1.4 billion.

Crypto exchange FTX, led by crypto billionaire Sam Bankman-Fried (SBF), is reportedly considering bailing out Celsius Network by bidding on the bankrupt lender’s assets. Coincidently, the information came out the same day Alex Mashinsky resigned as the CEO of Celsius.

“I regret that my continued role as CEO has become an increasing distraction, and I am very sorry about the difficult financial circumstances members of our community are facing,” said Mashinsky while explaining his decision. For FTX, acquiring the assets of Celsius would imply the exchange’s intent to save the lending firm, similar to what FTX US did for Voyager by securing the winning bid of approximately $1.4 billion.

Bloomberg reported on FTX’s interest in Celsius Network based on insights from a person familiar with SBF’s deal-making. However, an official statement from either party is pending at the time of writing.

On Sept. 22, FTX was reportedly found to be in talks with investors to raise $1 billion, which, if bagged, would help the exchange hold its $32 billion valuation amid a bear market.

Celsius filed for bankruptcy after disclosing about $1.2 billion in deficit in mid-2022. In August, Reuters reported on Ripple’s interest in purchasing Celsius’ assets, which has since gone cold.

FTX has not yet responded to Cointelegraph’s request for comment.

In what seems like a massive restructuring drive, Brett Harrison stepped down from FTX US president to move into an advisory role in the next few months.

1/ An announcement: I’m stepping down as President of @FTX_Official. Over the next few months I’ll be transferring my responsibilities and moving into an advisory role at the company.
— Brett Harrison (@BrettHarrison88) September 27, 2022

“Until then, I’ll be assisting Sam [Bankman-Fried] and the team with this transition to ensure FTX ends the year with all its characteristic momentum,” said Harrison.

Nexo hires Citibank to advise on acquisitions during market turmoil

June 23, 2022 Coin Telegraph

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“We’re in this together” — Crypto lending platform Nexo has appointed Citibank to advise on acquisitions from struggling crypto firms.

Crypto lending platform Nexo, says that its strong balance sheet means it can ride to the rescue to provide liquidity during the current market turmoil by acquiring the assets of struggling crypto firms.

In a blog post, Nexo announced that it is currently receiving advice from banking giant Citigroup on how best to acquire the assets of insolvent crypto firms so that investors can regain access to blocked funds.

Last week Antoni Trenchev, co-founder and managing partner at Nexo, told Bloomberg that the current crypto crash reminds him of the Panic of 1907 — where major Wall St institutions were forced to bail out other struggling firms.

“This reminds me, quite frankly, of the 1907 bank panic where JP Morgan was forced to step in with his own funds and then rally all those guys that were solvent to fix the situation.”

In the blog post Nexo boasted that it had always run a sustainable business model that didn’t engage in risky lending practices, as a result it now occupies a position of “unmatched stability,” meaning that it is uniquely placed to step into the breach to help shore up struggling firms.

“The crypto space is about to enter a phase of mass consolidation which has already begun with the remaining solvent players, like Nexo, expressing their readiness to acquire the assets of companies with solvency issues in order to supply immediate liquidity to their clients and relief to the entire industry.”

The post revealed that Nexo has already made contact with a number of struggling crypto firms in private, offering up different ways to provide liquidity assistance.

On June 13, Nexo publicly announced that it was prepared to acquire some of Celsius’ outstanding loans, following revelations that the fellow lending platform was suffering a major liquidity crisis.

On the same day Nexo’s native token, NEXO plunged nearly 25%, falling to a new yearly low of $0.61 per token as fears of major DeFi contagion echoed through the market.

Three days later, contagion fears were reignited as investment firm 3 Arrows Capital (3AC) failed to meet margin calls — suffering a loss of $400M in liquidations across multiple positions. Nexo says it doesn't have any exposure to 3AC.

Unlike many other embattled firms, Nexo has 100% liquidity to meet its $4.96 billion worth of debt obligations, according to U.S.-based audit firm Armanino.

Since the major drawdown on June 13, NEXO’s price has stabilised and is currently trading for $0.65, according to data from TradingView.

Nexo offers to buy out Celsius’ loans amid withdrawal suspension

June 13, 2022 Coin Telegraph

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Nexo platform could rescue Celsius' customers after “what appears to be the insolvency of the Celsius Network.”

There’s a glimmer of hope for the bear market’s most recent victim. Following reports that Celsius is insolvent, Nexo is offering a buy-out.

A Nexo representative told Cointelegraph that Nexo is trying to do the “right thing” as they are “mindful of the repercussions for retail investors & the crypto community.”

Celsius suspended all network withdrawals on Monday; users are not able to access their funds. In an open letter, Nexo has extended a formal offer to acquire qualifying assets of Celsius Network after their withdrawal freeze. The letter states:

“Nexo, its partners, and affiliates could readily acquire from Celsius part or all qualifying, outstanding collateralized loan receivables secured by their corresponding pledged cryptocurrency collateral, subject to Nexo’s risk management and collateral requirements.”

In a nutshell, the Nexo team would absorb all of Celsius’ loans and gain its customer database. The Nexo team has allowed seven days for the Celsius team to respond, as the proposal will terminate on June 20.

In a tumultuous weekend of market action, Nexo’s first call to help was rejected by the Celsius team on June 12:

“Yesterday [June 12] we reached out to the Celsius team to offer our support, but our help was refused.”

Separately, Nexo has reassured investors that funds are safe. The Nexo representative told Cointelegraph it was “the first crypto lender to publicly open its books to the public in real time back in September and invited all our competitors and responsible crypto platforms to follow our lead.”

Competitors including Ledn, a Bitcoin-only (BTC) credit and savings product platform have released similar statements to spread calm among investors. In a tweet, Ledn shared that customers’ investments are secure. BlockFi CEO Zac Prince tweeted that his business is operating normally. Ledn, Nexo and Blockfi have been open to talking about their business models with Cointelegraph previously.

Nexo is not the only company to come to the aid of Celsius. Bitcoin maximalist Cory Klippsten, founder of Bitcoin-only exchange Swan Bitcoin (who had previously called out Celsius as risky) has offered a “life raft” to Celsius investors.

Hey @celsiusnetwork users, I really hope you get your coins back from @mashinsky. And I also hope you never, EVER trust him again.

NO MORE 1 BTC MINIMUM for the @swanbitcoin life raft. Free membership in Swan Private ($3000 value) for the first 1000 Celsius members who DM me.
— Cory Klippsten (@coryklippsten) June 13, 2022

For some commentators, such as analyst Will Clemente, comparisons between Luna’s implosion and Celsius’ apparent insolvency are too hard to ignore:

I guess Luna and Celsius will be our two sacrifices to the crypto gods for this bear market?
— Will Clemente (@WClementeIII) June 13, 2022

As Klippsten and Nexo have made clear, the crypto community is attempting to limit the immediate fallout of Celsius' reported insolvency. The Nexo spokesperson said "[Nexo] hopes Celsius will accept this help and as few investors will be affected adversely as possible."

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