Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
The FTX collapse has stirred a major awakening for all industry stakeholders and it may stir a more stringent assessment of companies to pitch tents with in the future.
Even though the liabilities of the now-bankrupt FTX Derivatives Exchange are separate from those of the former Chief Executive Officer Sam Bankman-Fried (SBF), the industry and mainstream media seem to see things differently. Many are demanding justice citing the unethical way SBF adopted to run the company to the ground.
The truth is that FTX can be regarded as one of the best success stories in the entire crypto world, except, of course, its implosion showed that all that glitters is not gold. For a company that was ranked as the second largest in the industry by trading volume which topped a $32 billion valuation in its most recent funding round, its implosion now puts it as one of the biggest scams in the digital currency ecosystem.
The facts are there with evidence pointing to the fact that SBF used customers’ deposits to bankroll failed investments of its sister company and trading firm Alameda Research. With more than $4 billion illegally siphoned through a backdoor that he reportedly created on the FTX platform that made no other executive know what was going on, the committed crimes appear to be pre-meditated and willful and this accounts for what is angering investors, and stakeholders the more.
The Mainstream Media Sway of Sentiments
The media is expected to be a conduit for accurate reporting and awareness, a medium and resource that is highly crucial in the growing world of cryptocurrencies.
All media must report, that cannot be controlled, however, what they report is what must at least be within the confines of the facts at hand. Many members of the public have frowned at the latest reporting of the Wall Street Journal (WSJ) which has attempted to downplay the gravity of the situation.
The WSJ report portrayed SBF as a major philanthropic figure, a positive connotation of his squandering of funds in a fraudulent manner. In a Twitter post to publicize the news, the Wall Street Journal said, “When Sam Bankman-Fried’s crypto empire went down in flames, so did his plans to save the world,” a connotation that the industry is not finding acceptable.
From Elon Musk, the CEO of Tesla Inc (NASDAQ: TSLA) and Twitter Inc, to Michael Saylor, the Bitcoin bull whose firm, MicroStrategy Incorporated (NASDAQ: MSTR) has over 130,000 units of the premier coin, the number of people criticizing the article is growing by the hour.
WSJ giving foot massages to a criminal
— Elon Musk (@elonmusk) November 24, 2022
“Sam counterfeited billions in tokens via securities fraud, inflated that by billions more via accounting fraud, seized billions from customers via banking fraud, corrupted the establishment with the dirty money, then panic sold billions in stolen #bitcoin to crash the market,” Michael Saylor tweeted in response to Elon Musk who said the WSJ is “giving foot massages to a criminal.”
Saylor also noted that Sam Bankman-Fried never had any other plans but to “steal the world,” a designation that is not befitting one of those who allegedly claimed to be working to build the industry.
Dealing With the Hurt
As a once-acclaimed billionaire, Sam Bankman-Fried had the right to a luxury lifestyle, and his alleged $30 million mansion in the Bahamas is justified. However, the thought that he must have bankrolled some of his lavish estates with funds from the company, and users remained one of the highlights of the hurts many may not recover from.
FTX is not the only crypto juggernaut to go under this year as the likes of Three Arrows Capital (3AC), Celsius Network and Voyager Digital had also met their waterloo earlier in the year. The significance of FTX’s bankruptcy was that the company paraded itself as the lender of last resort sent to save other distressed outfits.
With the bankruptcy, a handful of top investors including Softbank Group, Temasek Holdings, and Multicoin Capital have announced plans to write down their investments in the company as a loss, even though there is an iota of hope to recover some of this cash in the bankruptcy proceedings. While these big investment outfits have got things figured out, the same cannot be said of small-scaled retail investors who have funds on the platform.
Positive Sides to the Saga
The FTX collapse has stirred a major awakening for all industry stakeholders and it may stir a more stringent assessment of companies to pitch tents with in the future. The collapse of the FTX exchange has engendered transparency amongst surviving trading platforms, most of whom have published their Proof-of-Reserves to show how liquid and healthy they currently are.
The collapse of FTX is also considered beneficial as reported by Reuters in that it will now force regulators to make a tougher demand from crypto service providers operating within their jurisdiction. With enhanced regulations as many have hinted at, user safety and the prevention of similar trends in the near future may be avoided.