FTX chief Sam Bankman-Fried says Fed driving crypto downturn

New Delhi: Cryptocurrencies are plummeting spectacularly, and the CEO of one of the top crypto exchanges claims the US Federal Reserve is to blame.

"The core driver of this has been the Fed," Sam Bankman-Fried, the CEO of crypto exchange FTX, told NPR.

According to Bankman-Fried, the Fed's aggressive stance to hike interest rates in a bid to combat excessive inflation has resulted in a "recalibration" of risk expectations.


The billionaire acknowledged the difficulty of the central bank's task, saying it is "caught between a rock and a hard place". However, he stated that the Fed's decisions over the upcoming months will have a significant impact on his company.

The Federal Reserve raised its interest rate by 75 basis points (bps) or 0.75 percentage points — the largest hike since 1994. It also cautioned that such large rate hikes will follow in the months to come as it aims to curtail the rising inflation. However, this would increase the chances of a recession as well.

Financial markets are already exceedingly uneasy, and cryptocurrencies have been in meltdown mode, as the age of cheap money draws to a close.

"Literally, markets are scared," Bankman-Fried was quoted saying. "People with money are scared."

The big dip
Bitcoin fell roughly 20% last week and continued to fall over the weekend. Its value has plummeted to less than half from the all-time highs at the start of the year. Other digital currencies, too, have nosedived – Ether has lost more than 70% of its value.

As the crypto sector made an all-out campaign to appeal and lure in young investors, and improve brand recognition, the value of cryptocurrency market surged over $3 trillion in 2021.

BlockFi, Crypto.com, and Gemini, three of the largest companies in the crypto market, have announced layoffs in recent days, while the CEO of Coinbase, one of FTX's major rivals, stated the company is cutting its headcount by about a fifth in a recent note to the employees.

FTX has not yet announced job losses, although Bankman-Fried did say in a Twitter thread that hiring has been halted.