Hester Peirce Opposes ‘Bailouts’ for Crypto Firms

Participants in the cryptocurrency industry should not back projects that find themselves in trouble due to negative market conditions. SEC Commissioner Hester Peirce said this in comments to Forbes.

“When the situation becomes a little more complicated, you learn who is really building something long-term, and who will disappear soon,” the commissioner said.

In her view, supporting projects that have fallen into difficulty harms the industry. A different model of behaviour could provide an opportunity for market participants and regulators to see how the industry performs during acute stress, Peirce added.

“Cryptocurrencies do not have a bailout mechanism […] I don’t want to come in and say that we will try to find a way to rescue you […] But even if we did, I would not want to use that power; we really need to let such things develop,” the commissioner emphasised.

Earlier, the head of FTX and Alameda Research Sam Bankman-Fried stated his readiness to help cryptocurrency market participants to mitigate the negative effects arising from problems at Celsius and Three Arrows Capital.

In particular, Alameda Research has already provided the broker Voyager Digital with a loan of 200 million USDC and a revolving credit line for 15,000 BTC (~$300 million).

In 2021, FTX prevented the bankruptcy of the Japanese cryptocurrency exchange Liquid after the hack of its hot wallets. The process of acquiring the platform was completed in February 2022.

On June 21 BlockFi agreed with FTX to provide a revolving credit line of $250 million. An analyst known by the nickname FatMan called this arrangement “a deal with the devil,” and a user by the nickname Raja saw in the agreement the alleged misconduct of Bankman-Fried, who allegedly “puts everyone in such a position, and then rescues them.”

SkyBridge Capital founder Anthony Scaramucci, in a conversation with Bloomberg, called the head of FTX “the new John Pierpont Morgan.”

“He saves cryptocurrency markets the same way JP Morgan did after the Panic of 1907,” explained Scaramucci.

As previously reported, FTX, Coinbase and Crypto.com revised their marketing expenditures amid the market downturn and heightened regulatory scrutiny.

Earlier, Binance CEO Changpeng Zhao called the crypto winter a suitable time for hiring new staff and further developing the business.

Read ForkLog’s bitcoin news in our Telegram — cryptocurrency news, rates and analysis.