The Grim Aftermath: FTX’s Monumental Demise and Legacy
CRYPTOCURRENCY ─ A year ago, the crypto market registered its euphoric all-time high. The market’s benchmark, Bitcoin (BTC), hit a staggering $69,000 ─ a parabolic rise to the top. Moreover, during that same period, it seems like countless market participants have never been more optimistic. In fact, numerous news and publications were shrouded with outlandish forecasts of sustained growth at an even greater height the following year.
Fast forward to today, well, to say that the space is struggling is an understatement. Looking back, it appears that since the start of the year, the situation has gotten worse every single month that passes by. From massive lay-offs and numerous high-profile hacks to the fall from grace and bankruptcies of legacy crypto companies. Indeed, if there is one thing that many realize: it is the fact that the promise of keeping your money safe has not aged well.
The Roughest Wave to Hit the Boat
With all this said, perhaps the most disastrous event is also the most unexpected: FTX’s collapse. In just a week, FTX went from being valued at $32 billion to filing for bankruptcy. Of course, this hero-to-zero situation is not new in crypto, but the gravity and significance undoubtedly set FTX apart.
Suddenly, market participants not only have to be careful about what crypto projects they invest in, but also just the mere fact of depositing your funds in a crypto exchange now seem to be a great deal of risk as well. To this extent, many considered FTX to be one of the best exchange platforms to start your journey in this volatile market.
This is brought by the fact that just a few months ago, it was going toe-to-toe with the industry’s biggest exchange, Binance. Furthermore, the company and its former CEO himself, Sam Bankman-Fried (SBF), were one of the most prominent lobbyists in the US congress on behalf of the whole industry.
Interestingly, it was SBF who spoke about the unique value proposition of crypto to regulators. He even explained how crypto companies like FTX exercise their due diligence and proper risk management, further exemplifying his company as one of the role models.
Yet, with all the revelations regarding gross mismanagement of funds, lack of checks and balances, and questionable business practices, it seems now like it was a great deal of irony.
The Unsavory Legacy Left Behind
Without a doubt, the most pressing legacy that this whole ordeal permeates is the need for regulation in the industry. From Binance’s questionable action (which many consider to be a predatory move) of announcing the sale of its stake from FTX to the almost “tradition” of collapsing crypto companies of telling that “all is fine” before freezing withdrawals and finally admitting that there might be a “problem” after all.
On the other hand, the almost lack of repercussions for crypto companies to be transparent about where they put exactly their clients’ funds have proven to be destructive. This is especially the case for retail investors who could not withdraw on time and now have a low to virtually zero chance of getting their money back. In any case, until proper reporting and regulation are set in, it appears that being vigilant and critical is our only recourse for now.
New to trading? Try crypto trading bots or copy trading
