Trending
Crypto
  • BTC
    16831.78 2.27%
  • ETH
    1265.03 3.85%
  • SOL
    13.54 1.35%
  • ADA
    0.31 1.29%
  • AVAX
    12.81 2.73%
  • DOT
    5.38 1.28%
  • LTC
    77.88 2.77%
  • BCH
    112.59 1.39%
  • CRO
    0.06 1.9%
  • MATIC
    0.87 3.35%
  • LINK
    7.4 0.97%
  • XLM
    0.09 0.58%
  • UNI
    5.7 3.52%
  • SHIB
    0 0.77%

These crypto proponents defend crypto space after FTX crash

The FTX collapse brought great mistrust in the crypto space. Several crypto proponents defend and compare it to the 2008 financial crisis.

The FTX collapse has many victims. Millions of people around the world have been affected, and bringing users’ trust into the crypto space will be harder than ever. This event caused a massive surge in sales of Trezor wallets and other hardware or software wallets. 

People even see this almost like a Lehman Brothers moment, taking the whole industry underwater. What was once a huge crypto exchange worth $32 billion is now bankrupt. A man who was once seen as the next JP Morgan is now the most hated man in the crypto space. 

Things will change forever for crypto

There are many rumors about how FTX messed it all up, but one thing is certain. FTX, along with Alameda Research, were lying about their financial status and had much more liabilities than assets on their balance sheets. FTX was mishandling the funds of millions of customers. 

Related article: Kraken and others join the “proof-of-reserves” run

This created great outrage in the space, causing a run on crypto exchanges. What Changpeng Zhao (CZ), the CEO of Binance, started, now other crypto exchanges must follow. Insufficient regulatory control over the companies is what caused the turmoil and will change the industry forever. The largest crypto exchanges will have to be audited and show their proof of reserves.

This is important because the exchange needs to have funds in case of mass withdrawals from the platform. CZ suggested that being overcollateralized is the right way to function as a cryptocurrency exchange.

CZ is so certain about crypto that he recently tweeted that the whole planet will use cryptocurrencies in a few years. He is taking drastic measures to save the industry. For example, CZ said Binance is working on creating a recovery fund to avoid negative effects like the FTX crash.

“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis,” CZ tweeted. 

Kris Marszalek, the CEO of Crypto.com, also supports the crypto space and defends his company in a recent video from Squawk Box. He stated Cronos is an open-source, decentralized project with 400 different projects building on top of it, having billions of dollars in reserves.

“We’ve never utilized it in a way like FTX did. We are a simple business, giving access to digital currencies and taking a fee for that,” he said.

Michael Saylor, the CEO of MicroStrategy, also had a say in the FTX crash by pointing out that FTX printed their tokens out of thin air thanks to the proof-of-stake (PoS) mechanism. He is a known proponent of Bitcoin, not crypto, so naturally, he supports the proof-of-work (PoW), which is a mechanism used by Bitcoin. 

“This is simply a very expensive lesson for the crypto ecosystem, and it shows the difference between crypto and Bitcoin,” Saylor said in a yahoo interview.

Bottom line

Many investors defend crypto, claiming it is growing and improving every year. However, this year was special as several fraudulent projects made it to a billion-dollar club. This is certainly going to bring more regulation into the space, as requested by many. 

Also read: Is COIN ready to accelerate amid all the crypto chaos?

This will be a challenging task for the SEC as almost the whole crypto space is decentralized. Making it centralized would lose the purpose of crypto in the first place. Nevertheless, the FTX crash caused such great mistrust in the industry that it will probably take a few years to get back where we were.

I got into financial markets by accident in 2012 and started with Forex trading. Later in 2017, I started investing in stocks in cryptocurrencies and began writing articles profess...

Comments

Post has no comment yet.

Want add your comment? Sign up or Sign in