PART I: FTX contagion and its aftermath — a paradigm shift towards self-custody within a regulatory framework
Markets are shaken, real incomes shrinking and consumer prices on the rise: A decade of economic growth and relentless money printing has had deteriorating macroeconomic conditions pushed across the US and global markets.
Slowing growth, ongoing geopolitical tensions, rate hikes and quantitative tightening on an unmatched scale will likely lead to a challenging period ahead for investors. Fears prevail that the FED can’t tame inflation without wrecking the economy.
Against this backdrop, crypto investors saw their fortunes vanish, as digital assets tumbled this year amidst a broader market correction; and the FTX collapse sent yet another shockwave through the community with people losing their life savings and founder Sam Bankman-Fried overnight going from crypto hero to zero.
The plot thickens as investigations unravel a tale of unprecedented greed, leverage, lack of due diligence and abuse of trust by central financial intermediaries — which led to the demise of Luna, Celsius, 3AC, Voyager and most recently BlockFi — with Chapter 11 bankruptcies piling up.
One could conclude, the biggest gainers of 2022 are the bankruptcy lawyers of this debacle. Amongst them, newly appointed FTX CEO John Ray III, who oversaw the Enron liquidation proceedings back in the early-mid 2000s.
Writing in a bankruptcy court filing that “never in his career has he seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here” offers a glimpse of what’s yet to come.
Needless to say, current events will have significant repercussions for the space. Crypto can expect an avalanche of scrutinising regulatory activities with sceptics spinning the narrative by conflating the issues of concern.
As Cardano founder Charles Hoskinson points out in a recent podcast: “FTX is not an unregulated business, this is a centralised business failure! Bitcoin wasn’t hacked, Ethereum wasn’t hacked, Cardano wasn’t hacked. None of the big chains failed, crypto didn’t fail! People failed, people in positions of trust!”
While the optics are bad, if we look beyond the confines of financial self-interest, the crypto industry is far from dead! Bear markets are a time to reset, flesh out bad actors and humble ourselves! “Only when the tide goes out do you discover who’s been swimming naked.” (Warren Buffet)
After all, there are tons of lessons to take home. Let’s tune out the noise for a moment and remember that Bitcoin was created in the aftermath of the 2008 financial crisis with the aim to take power of control away from central banks to the people.
Once the dust settles, we will recognise that recent events were the result of custodial and corporate governance failures. SBF was able to play into the elite biases, it wasn’t crypto that enabled him, blockchain didn’t falter, decentralised finance didn’t fail.
In Part II, we will take a deeper dive into decentralised finance, self-custody and self-sovereign identity, especially in the light of recent events.
About IAMX
IAMX is a token-based Self-Sovereign Identity and authentication protocol that empowers individuals with the means to own their identity. Adhering to the strictest of regulatory standards for identity protection, IAMX builds on the foundational principles of SSI to provide a robust and secure system where individuals are able to take control and manage their identity. Users of IAMX will realise significant time and cost savings through novel approaches to identity management and ecommerce transactions, like 1-click fulfilment, which are legally binding and maintain local regulatory compliance. With users in control of their identity data, time-consuming processes like Know Your Customer (KYC) or Know Your Business (KYB) become near instant, highly secure transactions.
IAMX builds upon the foundations of Self-Sovereign Identity (SSI), blockchain, and DIDs, enabling individuals, organisations, or any entity to prove their identity independent of external parties or centralised authorities. This way, the authenticity of anything tied to an IAMX DID can be independently confirmed by the entity holding the DID.
IAMX is at the forefront of the Web3 revolution, bringing the world’s most secure, decentralised, and user-friendly Self-Sovereign Identity (SSI) solution to the Internet. Adding the layer of identity and authentication to the Internet, with IAMX you can treat the Internet like you are always logged in. Pursuant to their mission and vision, IAMX is working to solve the problem of providing an identity to the billions of people who do not currently have a state-recognised, legal identity. Using a Biometric Identity Gateway, users with or without state-level identification can create their own identity for use online, one that relies on their unique physical attributes, including their face, iris, and fingerprints.
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