Goldman Sachs is considering a partnership with FTX. Attracted by the insane growth of the exchange, David Solomon, CEO of the investment bank, met with Sam Bankman-Fried, founder of FTX, in March. The two executives discussed a possible IPO and the platform’s relationship with US regulators.
Sam Bankman-Fried met with Goldman Sachs CEO
Goldman Sachs, the famous US investment bank, recently approached FTX, the growing cryptocurrency exchange. According to information shared by the Financial Times, David Solomon, CEO of the bank, met with Sam Bankman-Fried, founder of the platform, in March 2022. The meeting took place in the Caribbean.
Citing “people familiar with the matter”, the media outlet claims that David Solomon raised the idea that Goldman Sachs could advise FTX in its negotiations with US regulators.
FTX.US, the US arm of the exchange, is currently seeking to work with US financial regulators. To this end, the platform has invested in Investors Exchange LLC (IEX), a US stock exchange. With IEX’s regulatory expertise, FTX hopes to consolidate its position with the regulators.
David Solomon reportedly mentioned the Commodity Futures Trading Commission, the agency responsible for regulating derivatives. Last month, FTX applied to the Commission for permission to offer leverage to individuals without using a financial broker.
Rather than relying on an intermediary, Sam Bankman-Fried’s firm suggests settling derivatives transactions directly. FTX’s proposal will be considered at a hearing scheduled for 23 May. Rostin Behnam, chairman of the regulatory agency, says he wants to be cautious.
The Goldman Sachs executive has also sounded out the FTX founder about a “potential future collaboration” regarding “a price of convenience”. The investment bank would like to be able to buy crypto-currencies at a pre-determined price with the exchange. Under such an agreement, the selling price of the assets does not depend on the price of the digital currencies.
The bank is offering to help FTX in a possible IPO
Finally, David Solomon also said he would advise FTX on a possible IPO. Goldman Sachs was one of the banks that accompanied Coinbase during its stock market listing in April 2021.
For the time being, Sam Bankman-Fried seems reluctant to raise funds on a stock market. According to the Financial Times, FTX, whose valuation has reached $32 billion, is expected to focus on private fundraising in the short term.
When interviewed by the Financial Times in July, Sam Bankman-Fried said FTX did not need to go public despite the undeniable benefits of the process:
The interview with David Solomon came as FTX has accelerated its international expansion in recent months. In early March, the exchange announced its arrival in Europe by creating a European subsidiary with headquarters in Switzerland. A few weeks later, FTX set up a branch in Australia.
The crazy growth of the platform has obviously attracted the attention of traditional financial players such as Goldman Sachs. After recognising crypto-currencies as a new asset class, the bank has increased its investments in the sector. For example, Goldman Sachs has invested $5 million in the startup Blockdaemon, which is developing a staking infrastructure for institutional investors.
After relaunching its cryptocurrency trading service after a three-year hiatus and offering exposure to Bitcoin (BTC) to its wealthiest clients, the bank aims to “strengthen its presence” in the digital assets market, according to the Financial Times. For the record, Goldman Sachs was one of the first banks to enter the crypto-asset sector back in 2018.
