BlackRock's Larry Fink thinks most crypto companies will go out of business in the wake of FTX's collapse
"I actually believe most of the companies are not going to be around," Fink told the New York Times DealBook summit Wednesday.
AP
- The collapse of Sam Bankman-Fried's FTX will flush out most crypto firms, BlackRock's Larry Fink said.
- "I actually believe most of the companies are not going to be around," the CEO told the DealBook summit.
- FTX's implosion has triggered layoffs and further bankruptcies in the struggling crypto sector.
More crypto companies are likely to go under in the aftermath of FTX's bankruptcy filing, Larry Fink has warned.
"I actually believe most of the companies are not going to be around," the BlackRock chief executive said in an interview at the New York Times DealBook summit Wednesday.
Fink also said that BlackRock had invested $24 million into FTX through a fund of funds vehicle. The company manages $10 trillion in assets on behalf of clients ranging from huge pension funds to high-net-worth individuals.
"Could we have been misled?" he asked. "Until we have more facts, I will not speculate."
FTX collapsed last month after a report by CoinDesk showed that sister trading firm Alameda Research counted the exchange's native FTT token as a significant part of its portfolio, triggering a solvency crisis.
The failed exchange's Chapter 11 bankruptcy filing showed it held just $659,000 worth of crypto and hadn't produced reliable financial statements for its investors — leading to fraud allegations against founder Sam Bankman-Fried.
Its implosion has sent ripples across the digital assets sector, where many firms were already struggling in the midst of a brutal crypto winter that's seen the price of bitcoin plunge 63% to just over $17,000 this year.
Troubled lender BlockFi filed for bankruptcy Monday after receiving a $400 million credit line from FTX earlier this year, while creditors to crypto brokerage Genesis are calling up restructuring lawyers and exploring all available options to prevent a bankruptcy, Bloomberg reported.
Major exchange Kraken said Wednesday it would lay off 1,100 employees despite having "no material exposure" to FTX.
Some analysts argue that the wave of crypto bankruptcies this year will actually benefit the space in the long run.
Fundstrat head of research Tom Lee said last week that FTX's implosion shouldn't make digital assets like bitcoin untouchable – but will probably flush "bad players" out of the space.
"It's an important moment for the industry. I think it is cleaning a lot of and cleansing a lot of bad players. But do I think crypto is dead? No," Lee told CNBC. "I think there's a lot of people throwing gasoline in a crowded theater and yelling fire, and it's just going to be important for those who really like what decentralization and bitcoin are doing."