The fall of FTX and Sam Bankman-Fried might be good for crypto
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information,” new FTX CEO John Ray III said in a legal filing on Thursday. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
Ray, who oversaw Enron’s bankruptcy in 2001, stepped in as CEO shortly after founder Sam Bankman-Fried resigned (and reportedly tried to flee to Argentina, although he denies it). He is absolutely right that FTX was brought down by a complete failure of corporate controls, but in reality, the situation is far from unprecedented.
And unless the whole industry gets a grip, it will keep happening.
That’s why the exchange’s collapse might actually turn out to benefit crypto in the long term: although right now it seems it’s only contributing to tarnishing its reputation, the FTX saga playing out before our sorry eyes is a chance to turn things around before it’s too late — which is to say, before greed, negligence and corporate malpractice bring the entire industry to its knees.
Related: Will SBF face consequences for mismanaging FTX? Don’t count on it
Essentially, cases like FTX’s are a time bomb waiting to explode, and the longer they are left unchecked, the bigger the damage they can cause becomes. This is evident purely by looking at the scope of the deception at play and relating it to the company’s valuation, which, just in February, stood at $32 billion, or more than the Nasdaq, Credit Suisse and Robinhood. Of that, Bankman-Fried’s personal fortune stood at $16 billion.
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