In a recent Bitcoin and blockchain conference held in Argentina, crypto leaders opined about what led to the collapse of one of the largest exchanges, FTX.
During the panel discussion, while some opined that it was a ‘human error’ mounted by Sam Bankman-Fried’s failure of risk management, others felt it was orchestrated by the state of the broader crypto market and regulations.
Is FTT the definition of a shitcoin?
Samson Mow, the CEO of Pixelmatic and JAN3, alleged that FTX, just like Terra LUNA and Celsius, built a company by printing shitcoin. He explained that the shitcoin was treated as an asset that led to a $4 million hole as the company’s top executives started lending in the ecosystem.
Recent reports allege that Bankman-Fried sent at least $4 billion in FTX money, secured by assets like FTX Token, FTT, and shares in Robinhood Markets, to support its trading firm, Alameda.
At the time of writing, FTT is ranked at 211 on CoinMarketCap after the token tumbled from around $22 on Nov 7 to close to $1.2 through the week. That said, Song believes that the definition of a “shitcoin” could be altered by looking at the incident as FTT was largely “centralized.”
Mow also calls the company co-founders ‘grifters’ who maintain a rather ‘artistic’ image of smart guys. He remarked that the FTX top executives were often clicked together with the regulators. Notably, BeInCrypto cited reports that SBF and FTX have been prominent political funders who donated more than $70 million for campaigns during the 2021-2022 U.S. election cycle.
FTX token was centralized or decentralized?
Bitcoin educator and author Jimmy Song believes that the heart of the matter is that “people trusted FTX and FTX screwed the customers.” He opined, “Really the culture of altcoins that basically make it normal to go and trust these people, trust personalities that are put up on a pedestal, they can do go wrong because they’re the intelligent dictator that will always do right by you. That was the fault.” (sic)
Ethereum co-founder Vitalik Buterin is of the view that over 90% of everything is junk and the crypto space is not immune to the analogy. He stated, “obviously, some projects fail, some of them succeed” (sic). Buterin also noted on his Twitter handle this week that FTX’s type of “fraud cuts deeper” as it whitewashed itself as a compliant company.
Recently, Binance CEO Changpeng Zhao warned that more projects and businesses might be at the brim of failure. Binance chief, who recently pulled away from a deal to buy assets of the collapsing exchange, anticipates that more companies can go underwater as part of the domino effect of the exchange’s failure.
Meanwhile, Mow believes that the collapse is part of the “centralized versus decentralized” debate, with significant attention to the security setup. He stated, “Let’s just trust somebody with all of this stuff, instead of verifying stuff ourselves? And that’s the lesson that we need to learn from this giant mess.”
Meanwhile, Buterin further puts an onus on coding that brings transparency, by citing examples of Ethereum and ERC-20 tokens. However, not everyone agrees that Ethereum doesn’t have some centralized control in the current market setup.
For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.
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