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06 Dec 2022

Goldman Sachs sees crypto investment opportunities after FTX fiasco: Reuters

Goldman Sachs sees crypto investment opportunities after FTX fiasco: Reuters

Financial giant Goldman Sachs plans to spend "tens of millions of dollars" to buy or invest in crypto firms whose valuations have been hit by the demise of crypto exchange FTX.

The bank is doing due diligence on several different crypto firms, according to a report from Reuters. "We do see some really interesting opportunities, priced much more sensibly," Mathew McDermott, Goldman Sachs' head of digital assets, said.

Goldman Sachs is currently an investor in several crypto firms, including CertiK, TRM Labs, Elwood Technologies and Coin Metrics. Earlier this year, the investment bank re-established a cryptocurrency trading desk amid increased interest from institutional clients. More than 70 people are currently working for Goldman's digital assets team, and the bank is also building its own private distributed ledger technology, according to McDermott.

Goldman sees an opportunity in the FTX crisis. McDermott said the crypto exchange's implosion "definitely set the market back in terms of sentiment," as "FTX was a poster child in many parts of the ecosystem." Nevertheless, McDermott believes "the underlying technology continues to perform."

FTX filed for chapter 11 bankruptcy protection on Nov. 11 following a liquidity crunch. The crypto exchange reportedly tapped customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting up its demise.

The FTX collapse increased Goldman Sachs' trading volumes as investors sought to flock to regulated and well-capitalized players. "What's increased is the number of financial institutions wanting to trade with us," McDermott said. "I suspect a number of them traded with FTX, but I can't say that with cast iron certainty."

Goldman Sachs did not immediately respond to The Block's request for comment.

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