To Hadrian Lamb
Like a domino toppling, cryptocurrency giants Terraform Labs, Three Arrows Capital, Celsius and others have fallen one after another, and this time it’s FTX. At one time, he said the third-largest centralized cryptocurrency exchange (CEX) had just filed for bankruptcy, with about $9 billion in debt and he had $9.5 billion in assets, according to a Bloomberg report. . The swap was endorsed by the likes of Tom Brady and Stephen Curry, and the Miami Heat’s stadium was also named after the swap.
Before his downfall, exchange founder and former CEO Sam Bankman-Fried was even featured on the Forbes 400 and heralded by Fortune magazine as the next Warren Buffett. The collapse can be directly attributed to the plundering of the prices of the major cryptocurrencies, Bitcoin and Ethereum, by more than 20%.
So what went wrong? In short, FTX turns out to be run by a group of friends who have little integrity, lack risk management skills, and are overly reliant on their own FTT tokens of no intrinsic value. Alameda Research, a trading company owned by Bankman-Fried, prudently used FTX client funds for its operating capital.
that’s why, news An article about how Alameda Research used FTX’s client funds as collateral and suffered heavy losses due to the recent recession and poor trading decisions, leaving FTX unable to recover its loans.
Foreseeing an inevitable catastrophe and seeing an opportunity to defeat one of its biggest competitors, major cryptocurrency exchange Binance has decided to liquidate its entire holding of FTT tokens worth approximately $2.1 billion. did. While this may simply be Bankman-Fried retaliation against Binance CEO Changpeng Zhao (although Binance claimed it as a post-termination risk management strategy), this liquidation will put his 4 on FTX. His FTT tokens worth $51 million were leaked. The FTT price plummeted 94% from about $25 to his current $1.50. This also meant that Alameda Research had no way of liquidating its assets.
Most recently, $400 million worth of tokens fell to FTX following the exchange’s bankruptcy, even though the exchange was preparing to release about $380 million worth of tokens in batches over the next few years. Reported “hacked”. This may be a coincidence, but Alameda Research always accessed his FTX funds through a backdoor installed by Bankman-Fried.
Was this really a so-called ‘hacking’, as explained by Bankman-Fried, who is now under ‘police surveillance’ in his luxury mansion in the Bahamas? It could have been an inside job using the same backdoor that has been working. At the time of this writing, the “hacker” converted the stolen funds into his ETH and dumped about 25,000 ETH worth about $30 million, causing the price of ETH to fall 4% for him.
The price of the unregulated cryptocurrency industry is exemplified by the success of FTX Ponzi. ever. Additionally, cryptocurrencies are often seen as “untraceable”, making them ideal for money laundering and many want more regulation in the industry. However, this is not true at all and I propose that there should be no regulation. please listen.
First, crypto is traceable. Transactions made on a decentralized exchange (DEX) can be tracked using tools such as Etherscan. The purpose of blockchain and cryptocurrencies is to enable a decentralized ecosystem where people can exclusively own their money without being tricked by regulations (taxes) or centralized bodies (banks).
As is the case with FTX, the problem we have now is the lack of adequate regulation for centralized institutions. FCA to regulate centralized institutions such as banks, brokers and investment funds If neither the SEC nor the SEC exists in the real world, do you think any of them would “play fair”?
Since the conception of cryptocurrencies, it has always been said that it is “neither a wallet nor a token” which many either do not understand or simply choose to ignore. Depositing money into his CEX like FTX is basically depositing money into a custodian wallet, the exchange’s wallet, similar to depositing into a bank, a centralized entity. is.
Not only did FTX fraudulently lend money to its clients from right to left, but it also appears to have performed neither accounting nor due diligence. This would undoubtedly raise a lot of flags if it were a traditional financial centralized institution. Given that FTX was a CEX, I completely agree there should have been regulation, but centralization is exactly what crypto is not or shouldn’t be about. I clearly knew about this as I chose not to liquidate on FTX as I had actually liquidated the debt on Abracadabra and the records on the platform were not public.
Furthermore, are the regulations actually being implemented in the interests of retail customers? Or has regulation always been used as a tool to protect the interests of the elite and those in power?
Regulations are often imposed because of the economic benefits they bring and are often manipulated by governments and large institutions for their own benefit. These include Liz Truss’s sub-budget to boost bankers’ bonuses when they are struggling with a high cost of living, and a zero-corona policy in China to protect the integrity of the Chinese government and prevent cash outflows. increase. Even with current financial regulations, many people are able to circumvent regulation through loopholes such as political lobbying and foreign paper companies. That is why the DEX is the only way forward, as CEX is inherently flawed and severely limited in regulatory power.
In order for cryptocurrencies to dispel the negative image and aim to become a widely recognized currency, there should be no CEX that directly conflicts with the fundamental value of decentralization of blockchain technology. CEX is the product of those seeking to mimic traditional financial practices in the unorthodox realm of cryptocurrencies, leveraging the profitability of cryptocurrencies due to their unregulated nature. Therefore, centralized institutions need regulation because greed is inherent in human nature.
Those who ask, “How should I avoid yield farming scams or avoid investing in worthless tokens?” You should be aware of something. “Your wallet, your money” means that you should do all your due diligence yourself before investing in anything, and it’s common sense. If you really want to get involved in the crypto ecosystem , we need to “decentralize” the idea of having a third-party layer of protection. For those who think cryptocurrencies are too risky, there are always traditional financial options.