Google’s recent $2 billion investment commitment in the artificial intelligence (AI) firm Anthropic is poised to bring FTX, a cryptocurrency exchange that declared bankruptcy last year, closer to a full financial recovery. The tech giant’s investment, which includes an initial $500 million infusion with plans for an additional $1.5 billion over time, has raised hopes for the beleaguered exchange. This article delves into how this substantial investment is reshaping the prospects of FTX and the cryptocurrency market.
Also read: Wallets Linked to FTX and Alameda Move Over $60 Million
Travis Kling’s Optimism
Hedge fund manager Travis Kling, the founder of Ikigai Asset Management, expressed his optimism on social media platform X (formerly Twitter) about FTX’s financial prospects. Kling suggested that FTX’s bankruptcy was moving closer to a full recovery, even though the payout process might take several years. He noted that the estate assets versus customer deposits had reached an approximate 1:1 ratio, indicating a positive trend for the exchange.
However, not everyone shares Kling’s enthusiasm. Ari Paul, the founder of BlockTower Capital, offered a more cautious perspective. He pointed out that Google’s investment in Anthropic does not guarantee an immediate cash return. Drawing parallels, Paul likened it to the mistaken belief that FTX was solvent due to its holdings in SRM and FTT. Paul highlighted that the value attributed to Anthropic is based on paper valuations, with many of them being uncertain and not reflective of real market value.
Anthropic’s Remarkable Progress
Over the past year, Anthropic, the AI company in which FTX and its affiliate Alameda Research invested $500 million, has made significant strides. The company developed Claude2, a competitive chatbot to OpenAI’s ChatGPT, and secured nearly $7 billion in funding. Consequently, Anthropic’s valuation has skyrocketed from $4.1 billion to potentially over $20 billion, which, in turn, could significantly boost FTX’s stake in the company to more than $4 billion.
Meanwhile, former FTX CEO Sam Bankman-Fried (SBF) acknowledged errors made during his tenure at the exchange at his ongoing criminal trial in New York. SBF expressed regret that “a lot of people got hurt” when FTX declared bankruptcy. He specifically noted that his failure to appoint a risk manager was one of the mistakes that led to the exchange’s financial woes. SBF also pointed fingers at former associates for their roles in the troubles the exchange faced.
Google’s substantial investment in Anthropic is bringing newfound hope to FTX’s financial recovery, with contrasting opinions on the prospects. As Anthropic’s value continues to rise, FTX may inch closer to emerging from its bankruptcy woes, but uncertainties still loom large in the cryptocurrency landscape.