Cryptocurrency flows through a largely unregulated financial system every day and the industry answers to no governmental authority, according to a WSJ Pro Bankruptcy commentary. These upstarts pride themselves on sticking it to the established financial system. And yet, some of the most celebrated crypto executives have revealed themselves to be far worse guardians of capital than their traditional counterparts, according to the commentary. FTX, along with other crypto platforms, touted itself as a better option than traditional banks and brokerages all with little to no internal or regulatory oversight. As was laid bare in a U.S. bankruptcy court on Tuesday, the exchange’s ousted co-founder Sam Bankman-Fried took control of customers’ money and put it in undisclosed risky investments. He and his inner circle also appear to have been entangled in the business, in a way a lawyer for the firm described as “a personal fiefdom” of Mr. Bankman-Fried. FTX’s sister company, Alameda Research LLC, lent Mr. Bankman-Fried $1 billion, the company used corporate funds to buy swanky properties for senior staff in the Bahamas without proper record-keeping and bosses approved expenses using emoji, according to the firm’s new management. All this only came out once the firm collapsed into bankruptcy and the world got the first glimpse into its affairs. The digital-assets sector ballooned in the last decade to a peak of roughly $3 trillion globally last year. That growth has mostly taken place under the banner of building a decentralized financial system to upend traditional systems, where a handful of mega banks and broker dealers control the vast majority of financial transactions. Read more.
*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.
