- Goldman Sachs plans to take advantage of FTX crash by saving several other firms from bankruptcy.
- Other investment banks are also looking to benefit.
Goldman Sachs is set to bet big on the cryptocurrency market by pumping money into crypto firms negatively affected by the recent FTX crash. The major investment bank sees the implosion as an opportunity to grab a chunk of the industry while saving several other firms from bankruptcy.
Even though Goldman Sachs has not officially confirmed its intention, an executive suggested to Reuters in a recent interview that Goldman Sachs is not the only bank with this plan. The investment bank’s head of digital assets, Matthew McDermott, told Reuters that big banks see the FTX crash as an opportunity to present a more trustworthy and regulated front in the crypto business. The exec also mentioned that Goldman Sachs is already doing due diligence on several crypto firms to determine which ones are eligible.
Formerly the second-largest crypto exchange after Binance, FTX filed for Chapter 11 bankruptcy after it collapsed and confirmed that it might owe more than a million customers. Shortly after taking over from Sam Bankman-Fried, new CEO John Ray, who has extensive experience with liquidations, including energy giant Enron’s 2001 collapse, revealed a financial rot in FTX’s operations. He summarised it by saying:
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
Goldman Sachs Still Interested in Crypto Despite Industry Problems
Goldman Sachs is still interested in making strides in the crypto market regardless of the FTX crash and the prolonged bear market. Since the collapse, the general market sentiment has been particularly sour, especially from players in the traditional market. However, big names like Goldman Sachs see the situation as an opportunity for growth as they still trust the sector and its technology. According to McDermott:
“It’s definitely set the market back in terms of sentiment, there’s absolutely no doubt of that. FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform.”
Data Service for Institutional Players
The investment bank’s bet on the crypto industry extends beyond rescuing unhealthy crypto firms in the wake of FTX’s collapse. Goldman Sachs has launched a data service to properly classify digital assets, making it easy for institutional investors to understand and buy into the sector.
According to an official press release published last month, Goldman Sachs launched Datonomy in collaboration with crypto data publisher Coin Metrics and index provider MSCI. Datonomy – a play on “Taxonomy” which is the branch of science that deals with naming and classification – is available via subscription, and will categorize digital assets depending on usage. Dataonomy’s grouping will include sectors and subsectors.
Users subscribed to the service can also use provided data for research, analysis, portfolio management, and product development. Furthermore, the service will allow subscribers to track trends across different sectors of the crypto industry.