The recent FTX implosion has created an opportunity for Goldman Sachs (NYSE:GS) to invest in several crypto firms. Wall Street’s top investment bank sees FTX’s dramatic collapse as a way not only to grab shares of the industry but also save other firms from bankruptcy by pumping money into them.
Ahead of any formal confirmation, an executive from Goldman Sachs told Reuters in a recent interview that the investment bank is not alone in its plan to get involved with cryptocurrency.
Referring to the FTX mess, Matthew McDermott, head of digital assets at Goldman Sachs, stated that big banks see this as an opportunity to establish a more reliable and regulated image for the crypto industry. In addition, the executive mentioned that Goldman is already conducting due diligence on multiple crypto firms to decide which ones meet the bank’s investment requirements.
After FTX collapsed, which some have called crypto’s “Lehman moment,” it filed for Chapter 11 bankruptcy. The filing revealed that Sam Bankman-Fried, FTX’s founder and former CEO, never had his firms audited, which means that there is no record of what money the company had or where it spent its funds.
John Ray, the new FTX CEO with a history of liquidations experience (including energy company Enron’s 2001 implosion), who took over from Bankman-Fried, called FTX’s poor management and financial lack of transparency “unprecedented.”
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here” Ray was quoted as saying.
Despite the FTX crash and the current bear market, Goldman seems still interested in the crypto sphere. While most firm’s attitudes have soured since the crypto winter started, established companies like Goldman Sachs see this as a chance to capitalize on an up-and-coming industry.
According to McDermott, it has “definitely set the market back in terms of sentiment, there’s absolutely no doubt of that. FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform.”
McDermott’s views seem to be in line with those of Goldman Sachs’ CEO David Solomo who in a CNBC interview on Nov. 10 (FTX filed for Chapter 11 bankruptcy protection on Nov. 11), said that even though he finds cryptocurrencies “highly speculative”, he can still see a lot of potential in the underlying technology as its infrastructure becomes more established.
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