- There is one important lesson that is fairly obvious in hindsight and that I can say with absolute confidence will not be learned – David Schwartz.
An unprecedented event in the crypto market has rocked the market and created a multitude of opinions about the collapse of FTX. Chief Technical Officer Ripple David Schwartz shared his thoughts on the collapse of the FTX exchange.
While declaring that everyone should learn some lessons from the FTX meltdown, he noted, “There is one important lesson that is fairly obvious in hindsight that I can say with full confidence will not be learned.”
Schwartz explained, “When you hold billions of dollars of other people’s money indefinitely, the temptation to speculate with that money is irresistible. Verifiable controls are only sufficient when there are verifiable controls that make such risk-taking virtually impossible.”
David said: “Regulations punished after the fact would not catch it. Neither will investor due diligence. Of course, many people will say it could happen and probably will, but they will be shouted down by accusations of seeding FUD or disrupting a system that makes people money.”
The CTO stressed, “Something like this will always happen unless it can’t happen.” He added, “The temptation is irresistible. This is one of the most important lessons of FTX. But most people will actively choose not to learn this lesson, partly because of the telephant in the room.
Several investigating authorities are investigating the insolvent FTX group. In the United States, the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Security and Exchange Commission of Bahamas are actively working to determine whether or not FTX has misappropriated user funds.
The globally popular crypto exchange FTX filed for Chapter 11 bankruptcy in the District of Delaware on November 11, 2022.
Sam Bankman Fried Ex. The Chief Executive Officer of FTX was the one who started the bankruptcy proceedings and after a few hours of filing, Sam resigned from his post as CEO.
Earlier on November 20, 2022, the official FTX Twitter handle noted that “exchanges should be aware that certain funds transferred without authorization from FTX Global and related debtors on 11/11/22 were being sent to them via intermediate wallets to be transfered.”
It went on to say, “Exchanges should take all steps to ensure that these funds are returned to the bankruptcy estate.”
According to TheCoinrepublic reports on November 12, 2022, the Miami Heat, one of the top NBA teams, has severed its connection to FTX Exchange.
The former signed that deal for 19 years, a $135 million agreement in 2021, and after the initial $14 million payment slot was completed, the company was looking to pay $5.5 million in the coming year.