The commissioner made it clear that she does not support bailouts for anyone in the crypto industry, arguing it’s better to “let these things play out.”
Hester Pierce, the commissioner of the Securities and Exchange Commission (SEC), spoke out against the bailout of the crypto company, arguing that “letting these things play out,” was actually better to create a more sustainable industry.
Pierce, the most pro-crypto commissioner at the United States SEC, told Forbes that the recent crash in crypto, though painful, separates strong companies from weak ones.
“When things are a bit harder in the market, you discover who’s actually building something that might last for the long, longer-term and what is going to pass away,” she said.
The commissioner made it clear that she did not support bailouts for anyone in the crypto industry, particularly those that misused risk and became over-leveraged.
“Crypto does not have a bailout mechanism […] I don’t want to come in and say that we’re going to try to figure out a way to bail you out if we don’t have the authority to do it. But even if we did, I would, I would not want to use that authority, we really need to let these things play out.”
The remarks of the SEC commissioner came amid a lot of volatility, layoffs and recruitment submissions in the crypto market.
Sam Bankman-Fried, the founder of FTX and Alameda Research, is taking a different approach and rescuing crypto companies due to the market crash.
On Tuesday, Bankman-Fried announced to his 706,900 Twitter followers that he and FTX will be injecting $ 250 million into BlockFi through a revolving credit facility to bolster its balance sheets and strengthen the platform.
It came just day after Alameda Research agreed to give Voyager Digital a 200 million USDC loan and a “revolving line of credit” of 15,000 Bitcoins (BTC), worth $446.3 million at current prices, to be used “if needed to safeguard customer assests’.
Bankman-Fried told NPR on Sunday that this is something he and his companies have done “a number of times in the past” to “stem contagion” in a cascade of the collapse of crypto companies.
In an interview with Bloomberg on Wednesday, SkyBridge Capital founder Anthony Scaramucci called the FTX CEO the “new John Pierpont Morgan,” referring to the Wall Street financial baron who pledged his own money and convinced others to do the same to shore up the banking system during the 1907 Bankers’ Panic.
“He is bailing out cryptocurrency markets the way the original J.P. Morgan did after the crisis of 1907.”
Peirce claims however that the recession can be a valuable learning opportunity for market participants and regulators to see how the market moves in times of anxiety.
“It is helpful for us to see the points of connection. It’s a moment, not only for market participants to learn, but it’s also for regulators to learn so that we can have a better sense of how the market operates.”
Market volatility has already adversely affected the trading platform Celsius Network and the crypto-centric hedge fund Three Arrows Capital (3AC), which is facing bankruptcy after spending nearly a million dollars of liquidity involved in the ongoing fall in Ether’s price.
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