The founder of FTX warns that some cryptocurrency platforms are suffering from margin obligations that are many times higher than the initial capital.
In an interview with Forbes, FTX founder Sam Bankman-Fried shared his fears that some of the smaller and less popular third-tier cryptocurrency exchanges may already be bankrupt or on the verge of insolvency.
The businessman said that according to his information, there are at least 600 little-known exchanges in the US alone that offer dangerously high leverage, which can destroy both investors and the sites themselves:
“Few people have heard of AAX, Billance or Hotbit. But, like Coinbase, they trade bitcoin, ether, and other cryptocurrencies. They offer generous margin loans to their clients – up to 20 times their initial capital. Among these, there are some exchanges that are already in fact insolvent.”
Bankman-Fried noted that industry giants such as FTX, Binance or Coinbase are not yet at risk. However, many of them were forced to go through mass layoffs due to the bearish market trend, and their internal operations began to resemble the behavior of relatively stable online brokerages.
According to Bloomberg, Sam Bankman-Fried’s FTX is looking to acquire a majority stake in trading platform Robinhood.
Source: Bits
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