Why FTX Might Not Be the Only Victim in its Own Demise

Despite information regarding discrepancies in the balance statement of its sister trading company Alameda Research, FTX continued to seem regular last week.

Nobody was prepared for the path that led to FTX Derivatives Exchange's bankruptcy, and as a result, many people were taken off guard. Even if the process is still in its early phases, these slumps will eventually have a rippling effect.

FTX held a key place in the ecosystem of digital currencies, acting as an investment and the borrower of last option to struggling businesses throughout the whole crypto winter. Over 200 businesses that FTX has interests in were named in its bankruptcy petition.

While the failure of FTX was a major shock, the fact that throughout the summer, several big firms, including Celsius Network, Voyager Digital, Three Arrows Capital, and Terraform Labs, failed must have served as a reminder to keen observers that nothing was impossible in this industry.

The Broad-based Heartbreak and FTX

What may be hurting many people's hearts right now is a significant distinction between the FTX's demise and a plethora of other insolvent enterprises. Having promised the ethos of centralization, FTX notably dipped its claws into users finances in an unscrupulous fashion which it utilized to support useless business calls.

According to the information we have so far, Sam Bankman-Fried, the former CEO of FTX, moved user deposits totaling up to $4 billion to Alameda Research to support the company following the unsuccessful intervention of Voyager Digital and other investors.

“FTX now joins the infamous club of centralized crypto entities that went bust this cycle because they took enormous liberties not only with its customers funds but also with ethics, integrity, and the very ideals of crypto. Hopefully, both the industry as a whole and individual crypto users will be able to learn and grow from this experience,” According to a statement sent to Blockchain.News via email by Anto Paroian, CEO and Executive Director at the cryptocurrency hedge firm ARK36.

Thousands of investors will be impacted by the failure of FTX, therefore the learning Anto was alluding to may be necessary. Importantly, we can all agree that FTX won't be the only party blamed for its demise; this reality will eventually come to light.

The Setting for Regulation

Authorities have already been investigating the FTX scandal, and lawmakers in several nations with active cryptocurrency markets have called for closer monitoring of the sector. The fall of Terra (LUNA) shocked many authorities, and politicians in South Korea are still deeply involved in their inquiries against founder Do Kwon, who is still at large. The insolvency of FTX simply serves to reinforce the watchdogs' long-held claim that the sector is excessively speculative and needs sufficient regulation.

The chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler, emphasized that greater enforcement is likely to occur in the future because the industry is now in violation of the law.

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!

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