The FTX Fiasco Means Coming Consequences for Crypto in Washington DC
Congress should avoid engaging in a moral panic and instead produce legislation that brings clarity to the cryptocurrency industry.< /p>
Expert grip
On November 11, as the rest of the country celebrated Veterans Day, Sam Bankman-Fried announced that FTX, one of the world's largest cryptocurrency exchanges by volume, had filed for bankruptcy. Lawmakers and pundits quickly latched onto FTX's rapid disintegration to call for greater regulation of the crypto industry. “The most recent news further underscores these concerns [about consumer harm] and underscores why careful regulation of cryptocurrencies is indeed necessary,” said Karine Jean-Pierre, White House press secretary.
We still don't know exactly what happened at FTX. Reports that between $1 billion and $2 billion in client funds are missing are deeply troubling. Widespread harm to consumers and indications of corporate impropriety only increase the likelihood that Congress will take action to regulate the crypto industry. As Congress considers overhauling the regulatory environment around crypto, it is important that lawmakers provide regulatory clarity without impeding positive innovation.
Anatomy of a CollapseSam Bankman-Fried was once the golden boy of the crypto world. Launching his career in traditional proprietary trading on Jane Street, Bankman-Fried left Wall Street and founded a crypto-focused quantitative trading firm called Alameda Research in November 2017. Three months later, he shot to fame in being the first to make significant profits by arbitrating the price difference of Bitcoin in Japan and the United States, which would earn him and his team $25 million a day. A little over a year later, he founded FTX. One need only read Bankman-Fried's glowing and now-deleted profile of Sequoia Capital (which invested $214 million in FTX) to see how many people thought he was a financial savant.
Bankman-Fried eventually left Alameda to focus on FTX while retaining a large stake in the fund. FTX has quickly become one of the largest crypto exchanges in the world, as
Congress should avoid engaging in a moral panic and instead produce legislation that brings clarity to the cryptocurrency industry.< /p>
Expert grip
On November 11, as the rest of the country celebrated Veterans Day, Sam Bankman-Fried announced that FTX, one of the world's largest cryptocurrency exchanges by volume, had filed for bankruptcy. Lawmakers and pundits quickly latched onto FTX's rapid disintegration to call for greater regulation of the crypto industry. “The most recent news further underscores these concerns [about consumer harm] and underscores why careful regulation of cryptocurrencies is indeed necessary,” said Karine Jean-Pierre, White House press secretary.
We still don't know exactly what happened at FTX. Reports that between $1 billion and $2 billion in client funds are missing are deeply troubling. Widespread harm to consumers and indications of corporate impropriety only increase the likelihood that Congress will take action to regulate the crypto industry. As Congress considers overhauling the regulatory environment around crypto, it is important that lawmakers provide regulatory clarity without impeding positive innovation.
Anatomy of a CollapseSam Bankman-Fried was once the golden boy of the crypto world. Launching his career in traditional proprietary trading on Jane Street, Bankman-Fried left Wall Street and founded a crypto-focused quantitative trading firm called Alameda Research in November 2017. Three months later, he shot to fame in being the first to make significant profits by arbitrating the price difference of Bitcoin in Japan and the United States, which would earn him and his team $25 million a day. A little over a year later, he founded FTX. One need only read Bankman-Fried's glowing and now-deleted profile of Sequoia Capital (which invested $214 million in FTX) to see how many people thought he was a financial savant.
Bankman-Fried eventually left Alameda to focus on FTX while retaining a large stake in the fund. FTX has quickly become one of the largest crypto exchanges in the world, as
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