Goldman Sachs Chief Executive David Solomon met with billionaire FTX founder Sam Bankman-Fried in March to discuss forging closer ties between the Wall Street bank and the cryptocurrency exchange barely three years old, valued at $32 billion.
The meeting, which took place in the Caribbean, according to people familiar with the matter, is the latest sign of the growing influence of crypto companies in the traditional financial services industry.
During the meeting, Solomon and Bankman-Fried discussed Goldman advising FTX in its discussions with US regulators, particularly the Commodity Futures Trading Commission, the US derivatives watchdog, according to two people familiar with the matter.
In March, FTX filed a proposal with the CFTC that would allow it to sell leveraged crypto derivatives to retail investors and settle their trades directly, eliminating intermediary financial brokers such as Goldman.
Goldman is also eager to advise the crypto startup on future funding rounds and the two chief executives discussed the possibility of the bank playing a role in a possible FTX initial public offering, two people said.
FTX, which was founded by Bankman-Fried, now 30, in Hong Kong in 2019, was valued at $32 billion in January, more than the market caps of Credit Suisse or Deutsche Bank.
Goldman led a syndicate of banks that advised crypto exchange Coinbase on its Nasdaq listing in April last year, which initially valued it at $85 billion, although its share price has since fallen. .
One of the people familiar with Goldman’s meeting said that Bankman-Fried was primarily exploring short-term private fundraising options and had yet to make a final decision on whether to take FTX public.
According to one of the people close to the talks.
Solomon and Bankman-Fried also discussed Goldman providing traditional banking services to the stock exchange. Major lenders have been reluctant to open accounts for crypto exchanges due to concerns about the emerging regulatory status of the market and the risk of financial crime like money laundering.
FTX, which moved its headquarters from Hong Kong to the Bahamas last year, and Goldman Sachs declined to comment on the meeting.
FTX has rattled some mainstream financial groups with its CFTC bid. FTX wants to automate risk management and eliminate the need for financial market brokers after it acquired U.S.-regulated futures exchange LedgerX last year.
Goldman was one of the first banks to set up a cryptocurrency trading desk in 2018 to trade Bitcoin futures before shutting down the unit a few months later when the price of the cryptocurrency spiked. is collapsed. The bank relaunched its role in the booming digital asset market in March last year.
Some Wall Street traders have pushed bank executives to venture more into digital asset markets, but uncertainty about regulatory limits in the United States and elsewhere has prompted caution.
The banks are unable to trade cryptocurrency products for cash, but some of them, including Goldman, have been active in trading futures and other derivative markets since last year.
FTX has become one of the largest cryptocurrency exchanges in the world since its launch in May 2019. Its latest funding round has attracted blue-chip investors including Japan’s SoftBank and the Teachers’ Pension Plan from Ontario to Canada.
Last year, Bankman-Fried told the Financial Times that if FTX were to become the world’s largest crypto exchange, overtaking rivals Coinbase and Binance, then buying a financial institution such as Goldman would be “not out of the question at all. ”.
Additional reporting by Joshua Franklin
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Goldman Sachs Sought To Seduce FTX In Caribbean Meeting
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