According to Sam Bankman-Fried, some Bitcoin exchanges are insolvent

[bbc.reporter]

Does Sam Bankman-Fried's statement imply that the cryptospace not seen the bottom of this bear market? I am shaking my head because everyone who was going to capitulate appears to have capitulated already. There might not be more marginal sellers left in this market hehe.

In any case, the article mentioned that the strong giants are FTX, Binance, Kraken and Coinbase. For our safety, let us speculate which exchanges should be avoided by the community. It is very clear that Poloniex and Bittrex should be avoided. What are the others? Bybit, Deribit, Kucoin?


Sam Bankman-Fried, CEO of FTX, liquidator of the cryptospace

After throwing lifelines to troubled digital currency platforms BlockFi and Voyager Digital, Sam Bankman-Fried, the 30-year-old billionaire founder of FTX, warns that some crypto exchanges will soon fail.

“There are companies that are basically too far gone and it's not practical to backstop them for reasons like a substantial hole in the balance sheet, regulatory issues, or that there is not much of a business left to be saved,” says Bankman-Fried, who declined to name any specific crypto exchanges.

“There are some third-tier exchanges that are already secretly insolvent,” says Bankman-Fried.

Fried’s FTX, along with Coinbase, Kraken and Binance, are giants among digital asset exchanges.

Read in full https://www.forbes.com/sites/stevenehrlich/2022/06/28/bankman-fried-some-crypto-exchanges-already-secretly-insolvent/?sh=4a2fe21a47f7

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[Despairo]

It's just me or anyone else also think, this guy only promoting his exchanges since he mention his exchanges first?

Weird how he include Coinbase wouldn't insolvent while they're already lay off 18% of their workers and suffer $430 million losses, it's possible if Coinbase would bankrupt in the near future if Bitcoin price continue to drop and they don't have good management to take care or continue their business.

Honestly I don't understand why many people are choose other exchanges (low volume, small, new etc) rather than the old and reputable one until now? Talking about the fees, it doesn't have so much different. Usually it's just a matter of top exchanges didn't list all shitcoins, AFAIK Hotbit and MEXC are full of shitcoins that the reason why many people to use this exchanges. But for other middle-top tier exchanges, I don't see any reason why other still use it.

I think in the end, the popular and big exchanges we've seen right now would bankrupt in the future, similar like Mt.Gox.

|	. Name .	|	..... News link.....	|	............................................ Notes ........................	|
|	Gemini	|	...10% of the workforce	|	.......we have made the difficult but necessary decision to part ways with approximately 10% of our workforce	|
|	Coinbase	|	...Coinbase Lay Off 18% of Workers	|	.......Coinbase reported a $430 million net loss in the first quarter, or $1.98 per share, Revenue was down as trading volumes fell, and active monthly users declined 19% from the fourth quarter.	|
|	blockfi	|	...20% of it's workforce	|	.......dramatic shift in macroeconomic conditions” and BlockFi’s push to become profitable.	|
|	Crypto.com	|	...5% of its work force	|	.......That means making difficult and necessary decisions to ensure continued and sustainable growth for the long term by making targeted reductions of approximately 260 or 5% of our corporate workforce.	|

[pooya87]

We didn't need some random guy whom we never heard of tell us one of the most obvious statements just because he has a lot of money!
Cryptocurrency exchanges have always been failing after some time regardless of their size. We've had small exchanges nobody heard of go under and we also had big exchanges that controlled 85% of the trading volume go under. Saying this is going to happen again is like saying the sun is going to come back up again.

it doesn't have so much different. Usually it's just a matter of top exchanges didn't list all shitcoins, AFAIK Hotbit and MEXC are full of shitcoins that the reason why many people to use this exchanges.

Exchanges don't see things in terms of shitcoin/goodcoin, they only see it in terms of trading volume and if a coin gets a decent amount of volume or it can attract customers, they will add it. This has been the case with BSV, when it had high volume all these shitty exchanges (including the top ones) added it but when its volume dropped they all suddenly realized it is a shitcoin and started removing it while making a big show of it.

[2stout]

He didn't really tell us anything we don't already know but it was a good opportunity for promoting his company- any good business person would have done the same.  However, it would have been interesting for him to hint or mention which ones he felt are deficient/on the bubble.

[NotATether]

However, it would have been interesting for him to hint or mention which ones he felt are deficient/on the bubble.

Well if he did that, then it would've accelerated the downfall of those exchanges because investors would start short-selling them and dumping their shares. I think he still wants to save some exchanges, even if its by delaying their deaths by a few months.

At any rate, it's not too difficult to see which exchanges are becoming insolvent, without getting withdrawals blocked. You'd see that crypto is being traded on those exchanges many standard deviations away from the mean price across all the exchanges. Almost like it's being bought and sold for a premium.

[Poker Player]

I hope he is not right and that the problems are more of liquidity than solvency, which can be improved as Coinbase has done, reducing costs and adapting to the current market. It is that if by insolvency bankrupt just one of the mentioned exchanges we already know what is going to come: panic and the price of Bitcoin plummeting.

[stompix]

Does Sam Bankman-Fried's statement imply that the cryptospace not seen the bottom of this bear market? I am shaking my head because everyone who was going to capitulate appears to have capitulated already.

Three Arrows Capital  just defaulted, there is still pain to be inflicted
https://markets.businessinsider.com/news/currencies/crypto-crash-three-arrow-capital-default-voyager-670-million-loan-2022-6

As for Sam, this guy has been turning in some kind of undertaker, every single time lately that there is something bad happening there is talk about liquidation, bankruptcy, or taking over assets his name is mentioned there, I have a bad feeling  about his own business, there were some shady doings behind the scenes with Terra and as more and more info appears seems like he was involved too.

Weird how he include Coinbase wouldn't insolvent while they're already lay off 18% of their workers and suffer $430 million losses, it's possible if Coinbase would bankrupt in the near future if Bitcoin price continue to drop and they don't have good management to take care or continue their business.

And what do $430 million losses mean, that's what you will get if 10k BTC would slide from 60k to 20k for example, do you see it as a huge blow to a
company managing 30 billion in assets?. Coinbase holds far more coins for themselves than that, if I would be one that defaults it would be Micro, not Coinbase, plus Coinbase makes money out of every trade, they could make a profit even in a bear market, others can't do it. It was just overextending thinking the whole hype with metaverse, nft, etc will go on forever, it didn't so they are just cutting all those extra.

[zasad@]

I think that now there is a war not for exchanges and dollars, but for the ownership of the majority of coins in large eco-system projects such as Ethereum, Atom, polkadot, etc. All projects cannot come off, and they will develop even if the price of bitcoin falls sharply.

[franky1]

Weird how he include Coinbase wouldn't insolvent while they're already lay off 18% of their workers and suffer $430 million losses, it's possible if Coinbase would bankrupt in the near future if Bitcoin price continue to drop and they don't have good management to take care or continue their business.

companies where the owner only runs one operation are most at risk.
 in examples like coinbase. they have multiple subsidiaries doing different things. so they have something to lean against

coinbase is owned by DCG which extends its arms into many many businesses and so if one is failing he can just shift things from others to back it up..

businesses with no sister companies have no back up to lean against

of course if the DGC is not diversified enough and put all its eggs in one basket. then they all get affected. which is the bad management aspect you speak of.

but that said the "third tier" exchanges, meaning the smaller businesses with no large corporate coverage of sister companies, would be first to go

[slaman29]

How bittrex continues to be alive I have no idea, but I figure they saved themselves a lot of money all these past years by delisting wallets from time to time and of course stealing all their customers funds.

BTW read now about Cypherpunk Holdings selling ALL their BTC and ETH. It was only ended up as a $5 million total but if more and more small companies liquidate, maybe we haven't seen the end of it yet?

[so98nn]

There are companies that are gone too far? Well there is bitcoin that is gone too far and that’s not unstoppable for sure. So what if some bitcoin exchanges are at the edge of insolvency, the bitcoins would be transferred to other cold wallets or different exchanges and they would be secured over there. Nothing negative happens in bitcoin because in general either bitcoins ownership changes from one person to the other and the count remains same. If you talk about it in terms of fiat value then sure its gonna be up and down over the time but its secured by limited supply of bitcoin. 

[coolcoinz]

It's normal that guys like him come out with their worse predictions for the bear market. Nobody pays that much attention when we're in bull market and Mike Novogratz comes up and says we're going to 200k, but people get worried when bears say we're going to 1k like they did in 2019. Funny thing is that people who make these predictions often consider themselves "objective traders" and then at 4k they come up with 1k which is 75% drop and that never even gets close to what they were predicting. Tone Vays I'm talking about you

Another funny thing is that these exchanges were doing fine in 2020 when we dropped to 4k in March 2020 but suddenly they're in trouble at 20k? Who's going to believe that? If we were at 3k right now they'd probably all go bankrupt, but so would 99% of people who hold cryptocurrencies. It's not going to happen.

[ImThour]

Maybe he is trying to gain new customers for his own exchange, FTX by saying this about other exchanges?
I don't understand why people are taking his comments so seriously. He is just playing with his competition, that's how business is done I guess.

[Bitstar_coin]

~Another funny thing is that these exchanges were doing fine in 2020 when we dropped to 4k in March 2020 but suddenly they're in trouble at 20k? Who's going to believe that? If we were at 3k right now they'd probably all go bankrupt, but so would 99% of people who hold cryptocurrencies. It's not going to happen.

Same thing am wondering! how come suddenly almost all exchange are struggling with funds when the situation imo is not as worse as in 2018 where btc was at 3k, and how come suddenly this guy has something negative to say? Or he is doing this on purpose to cause panic among panic sellers to further dump the price? i don't get what he is getting at. Another face of fud perhaps 

[Lucius]

It's just me or anyone else also think, this guy only promoting his exchanges since he mention his exchanges first?

It is not only you, because apart from the fact that most of these newly rich people need to present themselves to the public as much as possible, another important thing is also that Bankman and his colleague CZ really need to share their wisdom with us these days. The reason, of course, is that they are definitely not making money as before, trying to beat the competition and return optimism to the market.

After all, people should turn more to decentralized solutions like DEX and drive these narcissistic bankmens into history. They pose only risk and act like Bitcoin banks, and the bad news for me is that only a few of them keep millions of BTC in their possession by selling a story to their clients that their digital assets are safe. The more people realize "not your keys, not your coins", the more insolvency there will be on CEXs.

[hd49728]

Not your keys not your coins. Don't trust any exchange that they are securing your coin 100% safely. Don't believe that they have good investment, risk management and safely style to use capital from crowdfunding or any source of income for their exchange.

Believe them, store your coin on their exchange, you don't own your coins and your capital.

AFAIK Hotbit and MEXC are full of shitcoins that the reason why many people to use this exchanges. But for other middle-top tier exchanges, I don't see any reason why other still use it.

In bull market, they are potential coins and now in bear market, they get a names they deserve, shitcoins.

Bear market is bad for people bought at top, in bull market last two years but it is good for people who still own cash and wait for good price. Bear market help us to see difference between good and bad market, really potential projects and shitcoin, low quality, weak projects.

[buwaytress]

Welcome to the corporate world. Most businesses run on razor-thin margins in good times, ill-prepared for even the slightest dips in fortunes or unexpected halt in revenue. Remember when industries ground to a halt during Covid and how quickly big business found themselves insolvent?

If some exchanges being at threat of insolvency is news, well, time to wake up and smell the coffee.

It’s ironic how this guy comment about failure of other exchange while he is the owner and investors of many exchange too.

Doesn't seem ironic if his purpose is to spread fear among his rivals' users or to further flood the market with FUD and I'm sure it'll work to some degree among those influenced by him, all the better for us. I always say good to purge, flush, just drain it all out in the bear so the floor and foundation becomes clearer.

[ChrisPop]

I think there needs to be more regulation in the crypto exchanges space. I mean Bitcoin is around for more than 13 years now and in the past few years the investmnet/trading activity has significantly increased. IMO there shoud be certain limits/minimum requirements that exchanges (especially the major ones which deal with massive volume) have to meet like a minimum reserve amount that should be kept at all times in current accounts to fulfil clients' needs.

Also I think these companies should be audited and at least part of the results to be published for the use of all stakeholders in the form of a monthly/quarterly/yearly report.

[darkv0rt3x]

Some events have been coming to the media that are more wake up calls for people to start caring more about sovereignty. People should take their Bitcoin out of the exchanges and save it in a custody manner. We have quite a few examples of exchanges going really wrong. We need more education on how to hold custody of our Bitcoins! Keeping Bitcoins in exchanges is like giving your credit card pin to a stranger in the middle of the street (by analogy, it would be the exchange owners).

[hatshepsut93]

I frankly don't care what's happening with Bitcoin exchanges.  I shorted some shitcoins on Binance at the top of the bubble and still didn't close those positions, but other than that I don't store any money on centralized exchanges. And I also don't care what is happening with Bitcoin in short-term, I'm a long-term investor. Failures of centralized exchanges don't change Bitcoin fundamentals, and eventually the problem with exchanges will be solved - either people will move on to decentralized exchanges, or exchanges will become tightly regulated, or a mix of both.