Home » FTX and crypto collapse was always going to happen, financial reform advocate says

FTX and crypto collapse was always going to happen, financial reform advocate says

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The bankruptcy of the world’s largest cryptocurrency company has sent ripples through the entire cryptocurrency ecosystem.

According to Dennis Kelleher, one of DC’s most influential voices in banking and finance, when the sector is on fire, the writing is likely on the wall.

Kelleher is co-founder and CEO of Better Markets, an independent organization that has spent the past decade seeking to reform and improve the US financial system.and in 2012 mentioned by new york times As “one of the most powerful lobbyists on financial regulatory reform,” he is not a fan of cryptocurrencies.

“No one should be shocked by the demise of FTX,” Kelleher wrote scathingly statement Released on Sunday. “Cryptocurrency fiction was visible to everyone who wanted to see it.”

Kelleher, of course, mentions the epic meltdown of FTX, one of the largest declared crypto exchanges. bankruptcy last week. The downfall of the company lehmans brothers moment for the sector pose a risk of contagion Industry wide and transmission The value of most cryptocurrencies plummets in the past week.

Kelleher said FTX’s demise is obvious “unless you’re paying (directly or indirectly) for FTX/cryptocurrency salaries, and your judgment is clouded by FOMO and greed”, but there are too many of investors said they were upset. By the promise of the industry and the allure of its label.

“To date, there has been no viable use case for cryptocurrencies, and personality cults and hype have not changed that fact,” he wrote.

crypto meltdown

Many crypto observers shocked With the demise of FTX, and especially how far the once brilliant star of the company’s founder and former CEO, Sam Bankman Freed, has been corrupted.His affable demeanor and discussion of philanthropic philosophy, commonly referred to as SBF got him a lot of fans.

At the center of SBF’s vast cryptocurrency empire was FTX, which had value earlier this year. $32 billionBut after a tweet from rival exchange Binance CEO Changpeng Zhao helped, the company turned out to be a delicate Trump house that collapsed last week. Fire up your execution with FTT, an FTX-specific token that plummeted in value on exchanges. just a few days later wall street journal reported having had SBF dip into client money Invest in Alameda Research, another of his companies. FTX Declared bankruptcy on November 11, announced SBF’s resignation.

chaos cleared Billions of dollars worth At FTX, the debacle isn’t over yet. Over the weekend, FTX revealed that it was investigating a number of “unauthorized transactions.” over $600 million Siphoned from FTX user wallets.a hacker considered responsible. And as for SBF, he reportedly said, “under supervisionBy authorities in the Bahamas, home of FTX, face US criminal charges.

But to skeptics like Kelleher, SBF, FTX, and the crypto industry at large, it was just a delusion that made people believe themselves in exchange for huge payouts.

“FTX/SBF/Crypto has been designed to prevent many people (including wise and influential people who should have known better) from understanding, watching, or questioning the fiction and fraud that is Crypto. We spent huge sums of money to secure a huge financial incentive to do so,” wrote Kelleher. .

Kelleher explained a meeting between Better Markets and SBF and his team a year ago, where the FTX founder failed to provide satisfactory answers to “hard factual questions.” Watchdog then accused investors of not completing proper due diligence on crypto companies, stating that the “vision” that crypto investors are putting up for sale is “hope, smoke, and hands.” “The desire to make quick money,” he added.

“Lawless Industry by Choice”

In recent years, major listed companies such as software development companies micro strategy and Elon Musk Tesla I bought bitcoin and declared it on my balance sheet.

However, 2022 has been a tough year for cryptocurrency bulls.So-called crypto winter The FTX meltdown will only dim the outlook for the sector.

Written by Kelleher JP Morgan Chase CEO Jamie Dimon was one of the few people to speak out on the shortcomings of cryptocurrencies, but was “bullied into silence” by other banks who “wanted to get cryptocurrencies before the crash.” ‘ said.

Earlier this year, Dimon said: He doesn’t believe cryptocurrencies can be called real currencies, prefers to call them “cryptographic tokens”. Last year, bankers called Bitcoin — one of the first cryptocurrencies to hit the market —worthlessand in 2017, he called the same currency “scamIt was inevitably set to “explode”.

Binance’s Zhao said last week that the cryptocurrency market will eventually “heal yourself,” But only if regulators step in to steer the industry, the view share by several other industry leaders. But even regulation will not be enough to save the sector, Kelleher writes, as it has become a “lawless industry of choice.”

“Rather than being a legitimate business that engages constructively with regulators and abides by laws and regulations like other legitimate companies, the strategy chosen by cryptocurrencies is to fight regulators and regulations while fighting the easiest Trying to get the best regulators and the most favorable laws,” he said. he wrote

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