The backlash from the downfall of the FTX crypto exchange has continued to ripple through the sector, leading to widespread condemnation from many.
The Global Strategic Client Development at Directa24, Marc Wood, described the admission by Sam Bankman Fried, the exiled CEO of FTX, that he was unaware of the exposure to the assets and liabilities, as ‘astounding’.
Bankman Fried has since been replaced as the firm’s CEO by John J. Ray III, who is looking to salvage a future for the troubled company, formerly one of the largest crypto-exchanges in the US.
Reflecting on the lessons that can be learnt, Wood told Payment Expert: “I think the admission by SBF that he didn’t know, if true, what the exposure was to the assets and liabilities were for FTX and Alemeda is pretty astounding and questions who he has surrounded himself with at the C suite.
“Having been a CEO of multiple companies you always need to know how much money do we have in the bank, what are our liabilities, reserves on a daily basis, sad but true you should be able to trust the FD to look after that but can’t the buck stops with the CEO.
“As for Binance’s involvement I think that CZ made exactly the right call to protect Biance from being involved in the contagion that the downfall of FTX represents, which has still not fully unwound a week later.”
Looking forward to the impact that the volatility in the story could have on the growth of the sector, he added: “I don’t think that the ‘coin volatility’ will make any difference to the fact that blockchain based solutions are here to stay and will revolutionise just about all industry sectors.
“Some projects may well disappear from this event but strong projects will survive. As for government regulation I think it gives all regulators a kick to reinforce the urgency of coming up with sensible regulation that allows creativity to prosper.
“I’m not sure the average investor or indeed the VC and institutional investors had any clue what SBF was up to in its FTX relationship and interactions within its incredibly complex network of over 100 companies! I think in order to restore investor confidence all Exchanges will have to become more transparent and honest, if not they will fail.”
Meanwhile, Nick Jones, the CEO of Zumo, a Scottish crypto platform, emphasised that actions like those taken by FTX have to stop.
He also took aim at investors who have encouraged this type of high risk behaviour in companies like Voyager, FTX and celsius.
He said: “It’s a tough time for the crypto industry – and the people who gave their money to a business they thought they could trust,” he asserted.
“Crypto businesses like FTX have been gambling on the customer dime and it has to stop.
“As an industry, it’s about time we now got serious about how we treat our customers and how we show – through targeted action – that this is an industry worthy of people’s trust.
“Wherever a crypto business is entrusted with the care of customer funds, it must be held to the most stringent standards of regulation and good governance. And those who have publicly failed in that endeavour should take a long hard look at themselves and the consequences of their actions.
“The losses and breach of trust engendered by the events of this week are deeply damaging and painful, and nothing we can do can change that. Today it’s on us to show the world a different face.”