BlackRock’s Fink Predicts Most Crypto Firms Will Go Bankrupt
BlackRock boss Larry Fink sees a definite need for cryptocurrencies and distributed ledgers in the future. But he doesn’t see any of the existing crypto companies surviving long enough for that to happen.
The CEO of the world’s largest asset manager thinks most crypto companies will fold following the collapse of Sam Bankman-Fried’s FTX empire, as mistrust permeates the decentralized finance market.
“I actually think most companies won’t be there,” Fink said in an interview with Andrew Ross Sorkin. on stage at New York Times DealBook Summit Wednesday.
Commenting on the collapse of FTX, Fink claims that the crypto exchange has not been a “distributed ledger open to the world.” Fink, who is an outspoken skeptic of cryptocurrencies, says FTX has gone against all the fundamentals of crypto, namely its use as an open database of transactions accessible in all geographic areas.
black rockwhich has about $8 trillion in assets under management, had thrown $24 million into Bahamas-based crypto exchange FTX through a vehicle called a fund of funds, alongside other Wall Street and Silicon titans Valley that pushed FTX’s valuation to $32 billion before it imploded earlier this month.
But as FTX plummets and other cryptocurrency companies consider bankruptcy options, Fink still believes distributed ledger technology has a future: “I actually believe this technology is going to be very important. I believe the next generation for markets, the next generation for securities, will be the tokenization of securities.
Fink outlined the many advantages of crypto, including instant securities settlement, simplified shareholder voting, and no intermediaries for transactions. “Think about it. It changes the whole ecosystem,” Fink said.
FTX and woke capitalism
Hours after his interview with Fink, Sorkin interviewed Sam Bankman-Fried, who claimed he did not “knowingly” misuse client funds and defended his actions at FTX. In his first live interview since his company collapsed, Bankman-Fried told Sorkin at the DealBook Summit, “I never wanted to defraud anybody. I was shocked by what happened this month.
Critics of the former billionaire say his crypto empire was nothing more than a “Ponzi scheme“, with new FTX CEO John Ray III calling the mess unprecedented and a “complete failure of company controls.” The main key accusation leveled against Bankman-Fried was that he used customer money from his crypto exchange to fund risky bets in his commercial company Alameda Research, which SBF claims he did not “knowingly” do.
Regardless of whether Bankman-Fried acted fraudulently or not, Fink says some of the blame for the FTX debacle lies with the venture capitalists who invested large sums of money in the company. After Sorkin argued that the whole model of venture capitalists doesn’t translate to good due diligence, Fink countered that the model of how Silicon Valley financiers go-ahead investments should to change.
According to Fink, as the world moves away from investing without due diligence, venture capital investing will be more about science and less about hype.
“More and more venture capital money is going to be fundamentally going to decarbonization,” Fink said, adding, “It’s not going to go to anything that has provided us with good utility to get food faster. or find a taxi earlier. I think it will be much more scientific and require much more technical understanding.
While BlackRock previously said it was headed for net zero, the asset manager still has a large position in fossil fuels. Fink said on stage that hydrocarbons will still be needed 70 years from now, but the company will also focus on carbon capture technology and reducing its emissions.
Fink’s stance on oil and gas has drawn criticism from both sides of the political spectrum, with Republicans rallying against his company’s “woke” capitalism, while Democrats and environmental activists have targeted BlackRock for investing in fossil fuel producers.
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