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Goldman Sachs sees FTX collapse as buying opportunity

By Darius McQuaid

15:25, 6 December 2022

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 In this photo illustration a Goldman Sachs Group logo seen displayed on a smartphone with a Goldman Sachs Group logo in the background
Goldman Sachs said what happened to FTX highlighted the need for more trustworthy and regulated crypto firms – Photo: Getty Images

Goldman Sachs, the American multinational investment bank plans to spend tens of millions of dollars to buy or invest in crypto companies after the collapse FTX, the cryptocurrency exchange that filied for bankruptcy on 11 November 2022.

Mathew McDermott, head of digital assets at Goldman Sachs, told Reuters that what happened to FTX highlighted the need for more trustworthy and regulated crypto firms and that big banks see this as an opportunity to acquire or buy crypto businesses.

McDermott said that Goldman Sachs was doing due diligence on a number of crypto firms with the intention of purchasing or investing in them, but did not reveal which ones. He said: “We do see some really interesting opportunities, priced more sensibly.”

Regarding FTX, McDermott said: “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.”

BTC to USD

Goldman Sachs and FTX CEOs met for talks

In March 2022, Goldman Sachs’ CEO, David Solomon, met the founder and then CEO of FTX, Sam Bankman-Fried, to discuss forming closer ties between the two companies.

People “familiar with the matter” told The Financial Times that the meeting took place in the Caribbean.

LUNC/USD

0.00 Price
-3.880% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee -0.0500%
Overnight fee time 22:00 (UTC)
Spread 0.00000703

DOGE/USD

0.09 Price
-4.350% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 0.0011058

BTC/USD

23,174.55 Price
-3.060% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 60.00

XRP/USD

0.40 Price
-3.280% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 0.00340

The two men discussed US regulatory bodies, and how the bank could play a role in a potential initial public offering (IPO) of FTX.

They also discussed Goldman Sachs providing traditional banking services to FTX.

Bankman-Fried stepped down as FTX CEO after his company filed for bankruptcy, with John Ray, who dealt with the multi-billion-dollar collapse of the scandal-hit energy company Enron in 2001, becoming the crypto company’s new CEO.

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Goldman Sachs builds distributed ledger

The investment bank is building its own private distributed ledger technology and has already invested in 11 crypto firms that provide compliance, crypto data and blockchain management.

The Goldman Sachs crypto team has grown to more than 70 people, which includes a crypto options and derivatives trading desk.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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