FTX chief called a “clown” and a “fraud” and the collapse of the exchange will hurt the cryptocurrency niche for years
Kraken founder and former CEO Jesse Powell shared his thoughts on the collapse of the FTX trading platform, which was the most important topic this week. According to him, what happened is a huge blow to the entire crypto industry, which will significantly undermine investor confidence in digital assets. In addition, the crisis around FTX will give another argument to anti-Bitcoin propaganda. Let’s take a closer look at the legendary cryptocurrency community’s point of view.
The situation with FTX didn’t get any better today. In particular, it was revealed overnight that the Bahamas authorities have frozen the assets of FTX Digital Markets. In question is the FTX Trading subsidiary based there, which is run by Sam Bankman-Fried.
Representatives of the American division of FTX US have also indicated that trading on the platform may stop in the next few days, therefore users are advised to close their positions and withdraw money if they wish to do so.
FTX CEO Sam Bankman-Fried at the congressional meeting
While further developments here are difficult to predict, many in the cryptocurrency community can no longer contain their anger over what is happening. Former Kraken exchange chief Jesse Powell is among them.
What’s next for cryptocurrencies
Notably, Powell avoids naming names in his statement, but it’s clear that it’s FTX we’re talking about. Here’s his quote.
There are so many smart, passionate, open-minded, friendly people in this industry with genuine humanitarian interests at heart. I know we will overcome this. True fans won’t stop. But this is a huge setback. I’m trying very hard to contain my anger.
Kraken founder Jesse Powell
Kraken founder hints that it’s best to face the truth – the FTX liquidity crisis has become an argument in the debate with cryptocurrency haters, who will now promote the dangers of investing in the industry. Jesse continues.
The damage is enormous. The collapse of an exchange of this magnitude is a gift to Bitcoin haters around the world. It’s the excuse they’ve been waiting for to support any criticism of crypto. We will be working to undo the consequences for years to come.
Without names or specific designations, Powell hinted that FTX chief Sam Bunkman-Fried is a “clown” and even a “fraud” – he has “mindlessly pursued his interests in favour of greed at the edge of sociopathy”. And there is some truth in this.
Mind you, it was previously revealed that Alameda Research, a company closely associated with FTX and Bancman-Fried, had suffered a financial collapse back in the second quarter of this year. In doing so, Sam decided to postpone the inevitable by issuing Alameda a loan – and that included using FTX user funds.
The price of the exchange’s native token has suffered the most from the FTX collapse
According to Decrypt’s sources, the collapse of FTX will cause a domino effect similar to the one we saw a few months ago after the collapse of the Terra crypto project. Many cryptocurrency companies are associated with FTX, so the financial failure of the exchange could trigger a new wave of bankruptcies in the industry.
For example, the day before, the popular blockchain platform BlockFi announced that it was suspending its operations and could not perform as normal due to the collapse of FTX. As a result, the platform has already suspended operations and frozen customer withdrawals.
What's particularly strange: the team representatives page on BlockFi's website is now empty altogether.
BlockFi’s employee page
FTX was a major industry player, so the collapse of the exchange immediately sparked the interest of financial regulators. The head of the Securities and Exchange Commission (SEC), Gary Gensler, has already commented on the incident in a recent interview. According to him, the Bachmann-Frieda platform was operating with a “toxic combination” of factors that led to losses for investors. Here’s his rejoinder.
It’s a very interconnected world of cryptocurrencies with a few concentrated players at the centre. One of these players was operating with a toxic combination: a lack of disclosure, customer money, a lot of borrowing and trying to invest with it. And then, when the market turned in the wrong direction, it turned out that many clients lost money.
SEC head Gary Gensler
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There are reports that the US Securities and Exchange Commission is investigating FTX, which has been ongoing for several months. Admittedly, Gensler did not confirm this in an interview. He did, however, point out that the crypto-sphere is “significantly out of step with the law” and that there are already clear rules in place to protect consumers.
Nevertheless, he agrees that investors “need better protection in this industry”. Commission officials also expect to contact many other major cryptocurrency companies if they want to avoid problems with the regulator. As we can see, the collapse of FTX will now make life much more difficult for crypto start-ups.
We believe the implications of the current FTX collapse for the cryptocurrency industry will be serious indeed. Even leaving aside the regulatory component, crypto owners will surely become more interested in decentralised finance platforms. And transparency will become an integral part of regular centralized crypto exchanges.
What do you think about it? Share your opinion in our Millionaire Crypto Chat. There we talk about other important topics related to the blockchain and decentralisation industry.
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