How Do You Know If Crypto is Trustworthy? Find Out What’s At Stake.
The scandals of recent years have taken a profound toll on the credibility and trust of the cryptocurrency sector. However, with the SBF trial behind us, Binance’s settlement with the DoJ, and the promise of a Bitcoin ETF creating a positive buzz in the markets, it feels like the industry is at a pivotal moment.
The biggest question is: how can we restore trust in a sector where bad actors have run rampant with customer funds? How can people learn to differentiate between a reputable, bank-backed platform like MultiBank.io and an FTX? What’s the surest way to know that funds are safer in Uniswap than in Terra LUNA?
With the benefit of hindsight and the sheer depth of reporting that has gone into the collapses of 2022, several trends and warning signals emerge that could serve as red flags for the future.
One example is the approach to regulation, in light of the fact that exchanges such as FTX have deliberately selected locations for their headquarters that are known for being low-regulation, such as the Bahamas or the Seychelles. Binance became infamous for not having a headquarters at all, and it was no secret that the firm operated extremely lax compliance procedures prior to around 2020, allowing users to trade without undergoing KYC.
Seeking to avoid regulatory oversight should be viewed as a red flag since even if the organization has nothing to hide, the avoidance in itself could result in penalties that damage the company’s reputation and viability.
The close relationship between FTX, a cryptocurrency exchange, and Alameda Research, a hedge fund that was one of FTX’s biggest customers, should also have been a red flag. Despite verbal assurances from Sam Bankman-Fried that the two firms were separate, the reality was
Read more on cryptonews.com
