Securities and Exchange Commission (SEC) Commissioner Hester Pierce has spoken out against bailing out crypto companies, arguing that it’s actually better to “let these things run” to create a more sustainable industry.
Pierce, a pro-cryptocurrency commissioner from the U.S. Securities and Exchange Commission, told Forbes that the recent crypto crash, while painful, separates strong companies from weak ones.
“When things get a little more complicated in the market, you find out who is actually building something that can last a very long time and that will soon disappear,” she said.
The commissioner has made it clear that she does not support bailing out anyone in the crypto industry, especially those who have mismanaged risk and become overly leveraged.
“Crypto has no escape mechanism […] I don’t want to come in and say we’ll try to find a way to bail you out if we don’t have the authority to do so. But even if we did, I wouldn’t, I wouldn’t want to use that power, we really need to let these things develop.”
The SEC Commissioner’s comments come amid a slew of bankruptcies, layoffs and hiring freezes in the cryptocurrency market.
Cryptokits to the rescue
FTX and Alameda Research founder Sam Bankman-Fried takes a different approach and intervenes to rescue crypto companies in a market crash.
On Tuesday, Bankman-Fried told his 706,900 Twitter followers that he and FTX will invest $250 million in BlockFi via a revolving line of credit to support their balance sheets and shore up the platform.
6) We take seriously our duty to protect the digital asset ecosystem and its customers.
— SBF (@SBF_FTX) June 21, 2022
This comes just days after Alameda Research agreed to provide Voyager Digital with a $200 million loan and a $446.3 million Bitcoin (BTC) “revolving line of credit” at current prices that will be used “as necessary to protect clients’ assets”. ”
Bankman-Fried told NPR on Sunday that this is what he and his companies have done “several times in the past” to “stop contagion” among a cascade of falling crypto companies.
In an interview with Bloomberg on Wednesday, Anthony Scaramucci, founder of SkyBridge Capital, called the FTX CEO “the new John Pierpont Morgan,” referring to the Wall Street financial baron who pledged his own money and convinced others to do the same to gain a foothold. banking system during the Banking Panic of 1907.
“He’s saving the cryptocurrency markets like the original JP Morgan did after the 1907 crisis.”
However, Pierce argues that the downturn could be a valuable opportunity for market participants and regulators to learn how the market moves in times of stress.
Crypto Biz: Crypto Biz Carnage Brings Celsius and Three Arrows Capital Closer to Bankruptcy, June 9-16
“It is useful for us to see common ground. This is a moment to learn not only for market participants but also for regulators so we can better understand how the market works.”
Market turmoil has already hit lending platform Celsius Network hard and cryptocurrency-focused hedge fund Three Arrows Capital (3AC), which has faced insolvency after liquidating roughly hundreds of millions of dollars linked to the ongoing collapse in the price of Ether.
Credit : cointelegraph.com