What the founders of cryptocurrency exchanges FTX and Mt. Gox have in common: the answer from the creator of Etherium
The bankruptcy of cryptocurrency exchange FTX was a major blow to the digital asset industry. However, this is not the first time it has been plunged into crisis by an exchange collapse: the most famous such incident was the collapse of the Mt. Gox platform in 2014. Many have compared former FTX executive and founder Sam Bankman-Fried to former Mt. Gox owner Mark Karpeles, but the latter was a much more “honest man”. That’s exactly what Vitalik Buterin, the co-founder of Efirium, made in his latest interview. Let’s talk more about the legendary developer’s point of view.
It’s not the first time the creator of Etherium has commented on the collapse of the FTX cryptocurrency exchange. In particular, shortly after the platform’s management filed for bankruptcy, Vitalik described what was happening as one of the things that “broke because of a fundamentally bad model at its core.”
A few weeks later, Buterin shared the conclusions to be drawn from the situation. In particular, he stressed that any overly centralised idea should be suspect. Well, the followers of Etherium and other truly decentralized projects are doing the right thing.
Etherium creator Vitalik Buterin
As you may recall, the hacking of the Mt.Gox platform and the subsequent theft of 740,000 bitcoins led to the first major fall of the cryptocurrency market. It happened in June 2011, with the event dropping the value of the first cryptocurrency by a few cents. Read more about this and other large-scale coin market collapses in a separate article.
What caused cryptocurrencies to fall so hard?
In 2019, Mark Karpeles was found guilty of “causing enormous damage to the trust of his customers”, abuse of power and related offences. It would all seem very similar to Bankman-Fried, but Buterin sees a big difference between the two “cryptocurrency villains”. Here’s his rejoinder, cited by CryptoPotato.
It seems to me that Karpeles behaved quite nobly after the fall of Mt. Gox. He didn’t try to make a Soo Joo [head of Three Arrows Capital, the crypto fund that went bankrupt this year – editor’s note] style redemption scene for himself. He went quiet for a while and worked hard to help people get their money back.
At the same time, Bankman-Fried launched a tour of various podcasts, interviews and live shows in which he explicitly denied his own connection to the situation, and tried to blame other members of the FTX exchange and trading company Alameda Research for what had happened. In fact, he even attended the New York Times' DealBook Summit, during which he stated that he did not intend to commingle funds from FTX users with the accounts of the trading company Alameda Research.
Former Mt. Gox owner Mark Karpeles
Both Bunkman-Fried and this year’s other “prominent figures”, whose negligence in managing crypto platforms has led to a major crisis, are unlikely to have any chance of fixing their image. Buterin continues.
It feels like the villains are getting shallow now. Mark has atoned for his mistakes. Unfortunately, people like co-founders Three Arrows Capital Su and Kyle won’t come to a similar result in a decade. I really hope I’m wrong.
Incidentally, another interesting episode has emerged in the court case against Bankman-Fried: according to CryptoPotato, the former FTX executive has agreed to be extradited to the US. This information has been confirmed by Sam’s lawyer Jerome Roberts.
As a reminder, following his arrest earlier this month, Sam was held in a prison in the Bahamas called Fox Hill. It is known for its harsh conditions for prisoners, and including an abundance of rodents and insects. This may have played a part in the former FTX CEO's desire to return to America.
There he awaits trial and at least eight charges, which add up to approximately 165 years in prison. Bankman-Fried initially challenged his own extradition to the US following his arrest, but has now agreed to it. So it is likely that Sam will soon be brought to the territory of America.
Bankman-Fried’s arrest
It looks like Vitalik Buterin between the two co-founders of the once popular cryptocurrency exchanges would definitely not have chosen Sam Bachmann-Friede. And that makes sense enough, as Sam has engaged in forbidden activity of the type of using client funds for his own needs, giving preferential treatment in exchange trading to fellow Alameda Research, and using money to fund media outlets. Now Bankman-Fried will have to answer for everything - and clearly in the US.
What do you think about it? Share your opinion in our millionaire cryptochat. There we talk about other important events that are affecting the coin industry in one way or another.
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