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BlackRock CEO: Bitcoin Technology Will Prevail

Larry Fink, CEO of BlackRock, acknowledged that the company invested USD 24 million in the FTX exchange.

Blackrock headquarters
Bitcoin Tech will prevail, according to Fink

In Short

  • Larry Fink, CEO of BlackRock: most cryptocurrency companies are going out of business.

  • For the executive, everything seems to indicate "mismanagement" in FTX.

The CEO of BlackRock, Larry Fink, commented that despite all the problems that arose after the fall of the FTX exchange, the technology behind Bitcoin "will be critical."

He commented that "the next generation of markets and the next generation of securities will be the tokenization of the securities themselves." Fink's statements came during his participation in the DealBook Summit organized by the U.S. newspaper The New York Times.

Centralized Exchanges

When asked about the FTX crash, the executive acknowledged that BlackRock, an investment manager, had invested $24 million before it collapsed through one of its funds. Despite what everybody knows regarding the exchange management, Fink is cautious and prefers to "wait and see how this (FTX case) develops."

"I mean, at this point, we can make all the decisions, and it looks like there was misconduct of great consequence," Larry Fink

In the executive's view, most cryptocurrency companies "are not going to exist" in the future, especially exchanges with their tokens, as with FTX. Once the world's third largest exchange, FTX used its FTT token to inflate its finances and borrow multi-million dollar loans, which later led to its bankruptcy.

Some FTX members, led by its former CEO, Sam Bankman-Fried, among other mismanagement, hid some $8 billion of negative balance. In addition, the exchange declared more than $2 billion in an illiquid and uncapitalized token called Serum (SRM).

The tokenized future

Fink also said that the next generation of markets and securities would be "the tokenization of securities." According to Fink, tokenization will enable a novel way to trade stocks, bonds, real estate, or other assets such as art, land, or wine, allowing transfers to be public on a distributed ledger.

In the blockchain space, tokenization is the process by which a digital token of a functional asset is created for that blockchain, allowing its transaction and historical ownership tracking.

At the NYT DealBook event, Fink stated that tokenization would provide "instant liquidity" and "reduced fees." Notwithstanding these advantages, he also expressed that these technologies will not disrupt Blackrock's business model.

Fink's comments reinforce what is happening in his immediate environment: Flowcarbon, a startup tokenizing carbon credits led by Adam Neumann, raised $70 million from notable investors such as a16z, General Catalyst, and Samsung Venture Investments. Similarly, in November, JP Morgan partnered with Polygon to trade tokenized cash deposits in a trial in Singapore via Onyx Digital Assets, a private blockchain they created.

While Fink is optimistic about the future of tokenization, he also believes that most cryptocurrency-related companies will only exist in the present. Still, he sees blockchain technology as very important. Regarding the collapse of FTX, he said its fundamental flaw was creating its token.

According to sources consulted, Fink acknowledges that the company he runs was one of those affected by the FTX bankruptcy. Blackrock invested $24 million in the cryptocurrency exchange platform.

"We'll have to wait to see how this plays out (with FTX). At this point, we can make all the decisions, and it looks like there was misconduct of significant consequence." Larry Fink

FTX filed for bankruptcy last November, and a week ago, the company's new managers went before the bankruptcy court in Delaware (United States) to begin a restructuring process.

The platform, which at one point had a market valuation of $32 billion, could have more than one million creditors worldwide. According to sources, FTX has admitted that it owes more than $3 billion to its top 50 creditors.

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