Let's move on from FTX’s collapse and get back to the basics
Pundits are calling the collapse of the FTX exchange the end of cryptocurrency and venture capitalism related to it. But it’s not. Some of them anointed Sam “SBF” Bankman-Fried “The King of Crypto” — and then summarily killed the king. But, in reality, crypto never had a king. The end of FTX may mark the end of Americans using unregulated exchanges, and it certainly is the end of exchange-native tokens, but crypto itself hasn’t changed one bit.
In reality, the FTX collapse is a symptom of a deeper problem, which is traditional finance’s “profit at any cost” mentality. For all the lip service paid to FTX as a regulated entity, at the end of it all, the exchange fell to profit-driven fraud like so many of its traditional counterparts. The stain FTX left behind has no more to do with real crypto than Enron had to do with real oil in the ground.
That brings us to SBF and his roots at quantitative trading firm Jane Street. SBF was a quant trader who asked why you’d ever use a decentralized exchange and then answered his own question by mishandling billions in customer funds.
However, SBF didn’t fail because of his background. Warren Buffet, no fan of crypto, has an oft-repeated quote that applies here: “You only find out who is swimming naked when the tide goes out.” It turns out that SBF was trunkless in that turquoise Bahamian water. He either miscalculated the risk he was taking or ignored it altogether, overleveraging FTT — his company’s own loyalty point masquerading as a $4 billion market cap store of value — and lost big on that bet.
Related: 5 reasons 2023 will be a tough year for global markets
It’s time we, as the crypto industry, drop the 10x mentality of seeking to gain enormous profits and focus on the fundamentals
Read more on cointelegraph.com
