Sam Bankman-Fried’s Alameda Research (SBF), is “stepping in”, to stop further contagion within the crypto sector during this bear market.
Many crypto companies are currently facing liquidity problems (of varying severity) due to the market downturn that has swept through 2022. Three Arrows Capital (3AC), and Celsius, two major firms, are reportedly at the edge of insolvency and could bring down others if they fail.
SBF said that, given the standing of Alameda’s and FTX, he feels they have a responsibility to “consider seriously stepping in, even if we are at a great loss, to stem contagion.”
“Even though we weren’t the ones responsible for it or were not involved in it. That’s what I believe is healthy for the ecosystem and I want it to thrive.”
SBF said that his companies have done it “a lot of times in the past”. He cited FTX’s $120 million financing for Liquid, a Japanese crypto exchange, last year. This was after it had been $100 million in August. Notably, FTX had announced its plans to acquire Liquid soon after it provided funding. The deal was reportedly completed in March.
He said that “We, I believe, about 24 hours later, gave them a fairly broad line of credit in order to be able cover all their demands to ensure customers were made whole and to think about the long-term solution.”
Recently, however, Voyager Digital, a crypto brokerage, announced that Alameda had agreed on June 18 to provide a loan of 200 million USDC and a “revolving credit” of 15,000 Bitcoins (BTC) totaling $298.9million at current prices.
Voyager Digital stated that the Alameda credit facilities will expire on December 31, 2024. They have an annual interest rate at 5% and are payable upon maturity. According to the firm, credit lines will not be used if necessary to protect customer assets in times of extreme market volatility.
The firm stated that the proceeds of the credit facility were intended to be used to protect customer assets against market volatility, and only if this is necessary.
Related: A Celsius recovery plan is proposed in a community-led short-squeeze effort
Although SBF has stated its good intentions to assist struggling crypto companies, there are contradictory rumors that Alameda was involved in the recent instability at Celsius.
Analysts like ‘PlanC” suggested to their 145.300 Twitter followers last week that Alameda conduct a 50,000 stETH sale-off earlier in the month to depeg it from ETH. This would prevent the company from exchanging the asset to the equivalent amount of ETH.
The rumors were first reported to SBF via twitter on June 20. They completely denied the claims and noted that:
“This is absolutely false. This is absolutely false. We want to help the ecosystem and have no desire to hurt them. It just hurts the ecosystem and us.
— SBF (@SBF_FTX) June 20, 2022