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08 February, 2023
 
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Investors lost $1 billion on FTX, prompting calls for industry regulation

Crypto companies changing their tune after the bankruptcy of FTX, looking for regulation

Kathimerini Greece Newsroom

The turmoil in the cryptocurrency world continues unabated following the bankruptcy of the FTX platform, which landed its founder, Sam Bankman-Fried, bankrupt almost overnight. Meanwhile, customer placements have cost at least $1 billion, and US Treasury Secretary Janet Yellen sees a need to regulate the digital currency industry. Even those who previously despised the prospect, such as the CEO of the largest cryptocurrency exchange Binance, are now changing their tune. Many companies in the industry, from Binance and Coinbase, which broadcast industry news, to smaller platforms like Crypto.com, OKX, and Deribit, are rushing to reassure their customers following the collapse of FTX, and are now strongly advocating for cryptocurrency activities to be brought under a similar regulatory framework.

Sam Bankman-Freid's empire has crumbled, and he is now under investigation by US authorities, including the White House, the Justice Department, and the Securities and Exchange Commission. According to the Wall Street Journal, until a few days ago, this brilliant 30-year-old was the industry champion, despite the fact that their company's finances were opaque.

His constant exposure on the social network Twitter, on the other hand, made him appear to be an open book, and he gave numerous interviews in which he explained his vision of a complex financial system based on digital assets.

Among other things, he had organized an international conference in the Bahamas, where his company is based, with political figures like Bill Clinton and celebrities like footballer Tom Brady and singer Katie Perry as guests. He recently spoke of his ambition to become the world's first trillionaire, as well as his desire to be an active philanthropist, encouraging young people to make money and donate to worthy causes.

Beyond that, his dark side became known, as he was offensive and crude in his manners during discussions and negotiations with representatives of regulatory authorities outside the US and other players. He was callous in his contacts to acquire troubled cryptocurrency companies, and he flattered state agents, taking advantage of the fact that they were investigating his rivals' activities. And, much to the chagrin of his fans and employees alike, it was eventually revealed that his company FTX was using billions of dollars in client funds to support risky transactions at the digital currency firm Alameda Research, which he had founded.

The loans in question, the amount of which has yet to be disclosed, blew a hole in FTX's finances and caused the company to fail. To summarize, Bankman-Fried's serious and most fatal flaw was that he was competing with other players in the digital currency world by advocating regulation and, in particular, by antagonizing Changping Zhao, the founder of the Binance exchange, who had initially financially supported FTX.

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Cyprus  |  cryptocurrency  |  USA

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