FTX Collapses: What Now For Crypto?
Sam Bankman-Fried was supposed to be one of the good guys. The FTX founder lobbied for crypto regulation and became the industry’s poster boy in DC. He was one of the Democrats’ largest donors. He was an antidote to the ‘Wild West’ world of crypto epitomised by arch-rival, Changpeng Zhao (“CZ”), CEO of Binance.
CZ was the architect of Bankman-Fried’s downfall when Binance sold its entire position in FTX’s tokens. This followed a CoinDesk scoop revealing that Bankman-Fried had improperly transferred customer funds from the FTX crypto exchange to his trading firm, Alameda Research, to cover its losses. A liquidity crisis ensued as customers demanded withdrawals worth US$6 billion. After Binance pulled out of a rescue deal, FTX filed for bankruptcy.
How did FTX’s reckless dealings go unnoticed for so long? Their investors included blue-chip companies like Sequoia Capital, Blackrock, and Temasek. They sponsored one of America’s top basketball teams, The Miami Heat. They paid millions for an advertisement during America’s premier sporting event, The Super Bowl. Celebrity endorsers included Tom Brady, Larry David, and Gisele Bundchen.
Last week, I heard from Anthony Scaramucci here in Singapore. President Trump’s short-lived Communications Director had agreed to sell 30% of his investment business to Sam Bankman-Fried. Scaramucci thought his wealth of experience dealing with shysters and demagogues in politics and business gave him a sixth sense for fraud. But he too was fooled by Bankman-Fried. While Scaramucci remains a wealthy businessman, millions of much poorer retail investors face bleak financial futures as FTX’s collapse swallows their savings.
What does all this mean for the future of crypto? And how can we stop future financial frauds?
To answer these questions, Chartwell recommends the following experts:
Anthony Scaramucci
Former White House Communications Director and business associate of Sam Bankman-Fried
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Charles Hoskinson
Co-founder of the Ethereum blockchain platform
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Justin Sun
Founder of TRON, one of the world’s largest decentralised blockchain ecosystems
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Cathy Mulligan
Co-Director of the Imperial College Centre for Cryptocurrency Research and Engineering
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Kristin Smith
Executive Director of the Blockchain Association
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Tom Wright
Bestselling author and expert on financial fraud