- Goldman Sachs is looking to invest tens of millions of dollars in cryptocurrency companies, Reuters reports.
- The bank has already invested in 11 cryptocurrency companies.
- “The FTX turmoil has made investors want to trade with more reliable and disciplined crypto companies,” said a digital asset manager.
Goldman Sachs has no plans to back out of its digital asset plans despite the collapse of cryptocurrency exchange giant FTX. Instead, Reuters reported on Dec. 7, 2022 that it is looking to invest in “tens of millions of dollars” in cryptocurrency-related companies.
FTX, once valued at $32 billion, went bankrupt after a “run on the bank”, leaving thousands of customers unable to withdraw their deposits, wreaking havoc on the industry. According to cryptocurrency analytics firm Messari, the current market capitalization of cryptocurrencies has plummeted by more than two-thirds from its all-time high in November 2021.
The deeply discredited FTX founder Sam Bankman-Fried has defended his claims of misusing customer funds as an accounting error. But there are reports suggesting that claim is false.
The FTX bankruptcy has not only hit the price of cryptocurrencies, but also reduced the company’s value. Mathew McDermott, head of digital assets at Goldman Sachs, says now may be the perfect time to buy or invest in cryptocurrency companies on the cheap.
“It presents a pretty intriguing opportunity, and at a more reasonable price,” McDermott told Reuters, adding that Goldman does due diligence on many companies. In addition, the FTX turmoil has made investors want to trade with more reliable and disciplined cryptocurrency companies, which has increased Goldman’s trading volume, he said.
“We’ve seen an increase in the number of financial institutions that want to do business with us. I think some of them did business with FTX, but I can’t say for sure,” McDermott said.
Goldman has invested in 11 cryptocurrency companies and is developing its own distributed ledger.
The bank’s dedicated digital assets team has 70 staff working on cryptocurrency derivatives and options trading. Goldman sees the current wave of layoffs in the crypto industry as an opportunity to recruit talent. But McDermott says the bank is happy with the size of its staff so far.
McDermott said the FTX debacle “has definitely set the market back on sentiment.”
“FTX has been an iconic company for many parts of the ecosystem, but again, the underlying technology is still in use.”
Goldman Sachs did not immediately respond to an Insider request for comment.
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(Translated by Fumiko Nakata, edited by Toshihiko Inoue)
Source: BusinessInsider
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