Crypto Community Rocked by FTX Scandal
The cryptocurrency industry has had its fair share of scandals, but the most recent one involves the collapse of FTX and is among the worst in recent memory.
Loss of Money and Lessons Acquired
It’s critical for the industry to take lessons from this catastrophe even if some investors may never completely recover from the collapse of FTX. Moving ahead, it is essential to do exhaustive due diligence, steer clear of centralized platforms wherever feasible, and keep a close eye out for fraudulent activity. The crypto community will become more knowledgeable and clever as a result.
Inside the Collapse: Incompetence and Culture
The company’s inner workings, including information about its crazy and drug-fueled corporate culture, as well as the lack of expertise of key people who were managing significant amounts of money, came to light as word of the collapse spread.
A reputational hit
The FTX controversy only served to further damage the credibility of the cryptocurrency sector, which was already under assault. Blockchain and cryptocurrency technologies were created to combat financial inequity and corruption, but under the direction of SBF, they were turned into a weapon for deception and manipulation.
Governmental Action
Authorities now have a justification for enforcing harsher laws and rules following the recent collapse of FTX. The World Economic Forum has advocated giving ownership of cryptocurrencies to trustworthy parties like JPMorgan, while Senator Elizabeth Warren has urged for tougher laws to safeguard consumers. On February 9, the SEC and Kraken reached a settlement over the staking program, although this move did not address the flaws that allegedly allowed SBF to commit his crimes.
Anti-Crypto Agenda of the SEC
Following the Kraken settlement, several have expressed concern about the strong ties between the SEC and FTX. Crypto investor Adam Cochran thinks Chair Gensler is out to destroy the cryptocurrency business. It may bring some resolution that SBF has been extradited to the US to face accusations of wire fraud, securities fraud, and money laundering, but it appears that the SEC will continue to promote its “consumer protection” agenda.
Dependence of Society on the System
ShapeShift CEO Erik Voorhees spoke on the “disease” of society as it relates to depending on the government for protection on the Bankless Podcast. He thinks that instead of relying on the political system to effect change, people should take charge of their own well-being. SBF was perceived as a supporter of the political system, but Voorhees saw himself as a genuine capitalist who believes in the power of free markets. The circumstances surrounding the FTX collapse have demonstrated that the system does not always uphold liberty, democracy, and individual autonomy. It is terrible that it took losing billions of dollars to realize this.