Bankman-Fried: “Part of the third-tier cryptocurrency exchanges are actually insolvent”

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The founder of FTX warns that some cryptocurrency platforms suffer from margin obligations many times higher than the initial capital.

In an interview with Forbes, FTX founder SamSam Bankman-Fried shared his fears that some of the small and unpopular third-tier cryptocurrency exchanges may already be bankrupt or on the verge of insolvency.

The businessman said that according to his information,In the US alone, there are at least 600 little-known exchanges that offer dangerously high leverage, which can destroy both investors and the exchanges themselves:

“Few people have heard of AAX, Billance or Hotbit.But, like Coinbase, they trade Bitcoin, Ether and other cryptocurrencies. They offer their clients generous margin loans - up to 20 times their initial capital. Among these, there are some exchanges that are actually insolvent.”

Bankman-Fried noted that industry giants,such as FTX, Binance or Coinbase are not yet at risk. However, many of them were forced into massive layoffs due to the bearish market trend, and their internal operations began to more closely resemble those of relatively stable online brokerages.

According to Bloomberg, the FTX exchange owned by Sam Bankman-Fried is highly likely planning to acquire a controlling stake in the Robinhood trading platform.