Crypto 2023: FTX Fallout’s Ripple Effects and the Urge for Law Enhancement and Education
FTX Collapsed Not Only Itself But Also Others
Sam Bankman-Fried will fly to the U.S. on Wednesday after taking the hearing in the Bahamas. He will face charges of money laundering and conspiracy to commit wire fraud. There is a scenario in which SBF requests bail once in the U.S. after he has been denied that in the Bahamas.
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The drama seems to keep going. And we can see its ripple effects in the market. Celsius Network and BlockFi sit in bankruptcy court. Most recently, Auros Global, a crypto trading company and market maker, stated that it was granted a “Provisional Liquidation” request last month from a court in the British Virgin Islands. The goal is to restructure massive debt to lenders.
OffShoreAlert, an intelligence site, showed that Auros had $20 million of funds frozen on FTX. The implosion of FTX drove Auros to encounter liquidity issues. And it cannot satisfy recalls from lenders.
As we all know that 2022 has been a nightmare for crypto investors. The FTX case is not the only disastrous event in the crypto industry. Also, it does not collapse the whole market in one hit. Crypto might not be immortal but it is not weak, either.
However, if we take the events in the crypto market as thrilling stories without great lessons, things can get worse and the worst scenario is the implosion of the entire system.
Crypto 2023: The Urge for Law Enhancement and Education
Finding the roots of every problem is highly recommended to comprehensively solve it. Also, it enables you to avoid stumbling into the same pitfalls. So, what are the reasons for the collapses of many big names in the crypto world, such as FTX, Luna, BlockFi, etc.?
Many experts believe that loose regulations leave the space for freedom to innovate new ways but it leaves room for fraud, scams, thefts, and hacks. After the chaotic 2022, the crypto world needs law enhancement in the upcoming 2023.
In March, the Blockchain Intelligence Group spotted potential suspicious activity relating to Frosties, a non-fungible token (NFT) project, and notified the authorities of law enforcement. Agents could find and trace financial transactions along the blockchain and alongside other electronic data for the identification of the culprits.
Instead of sitting on the case for months, blockchain investigators show their power and capacity of simplifying and enhancing the effectiveness of the process. Especially when 2022 has witnessed many cases of cyber-attacks and cross-jurisdictional money movement to local police agencies.
There will be no luxury in sending these investigations to the FEDs, yet local police departments will serve their resources to train and equip financial and economic crime detectives with the latest crypto knowledge and specialized skills.
In 2023, it might be possible that transnational criminal organizations (TCO) and drug trafficking organizations (DTO) will use the parlance of investigators. The implication is that every ecosystem participant must file suspicious activity reports and spot potential crimes.
Although crypto has a verification system and unprecedented level of transparency, transnational criminal syndicates exploit the censorship resistance of decentralized networks like Bitcoin and Ethereum to use their earnings for illegal activities.
Blockchain analysis plays an important role in tracking flows from criminal activity, yet it is the whole solution. The knowledge and skills of how to avoid being a victim of crypto fraud will be a trend in 2023. Meanwhile, the cybersecurity industry will strengthen as the digital asset investigation space continues to grow.
Also, it is more affordable for local police agencies and financial investigators to buy tools tracking and tracing cryptocurrency scams and frauds.
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