Greedy Individuals and Companies are Destroying Crypto
The collapse of FTX
The collapse of the second-largest cryptocurrency exchange FTX and all of its affiliated companies this week has caused massive damage to the whole crypto landscape. Not only will millions of users lose billions of dollars, but the trust in the system may have been irreparably damaged. And once again, it was entirely avoidable and only the greed of a few individuals caused the disaster.
Coffeezilla made a great point in his video about the subject when he compared a cryptocurrency exchange to a casino. It doesn’t matter whether the prices go up or down, the company will always earn money from the trading fees. As long as they don’t do anything stupid, it’s basically free money. But of course, they did something stupid.
It turns out, FTX lent out customer funds even though their terms of service said that customer assets would remain on the platform. The loans went to the crypto trading firm Alameda Research which was also founded by the FTX founder Sam Bankman Fried also known as SBF. As collateral for the loans, they got the FTX-issued FTT token. As soon as FTX started experiencing problems, the FTT token quickly lost its value and FTX wasn’t able to fulfill customers' withdrawal requests.
