Crypto

FTX Collapse Could Be ‘The Best Thing That Ever Happened To Crypto’, Claims Scotcoin Chief

Monday, November 14, 2022 3:00 p.m.

Temple Melville, CEO of project community interest company Scotcoin, told City AM today that regulators will want to try and preserve something for FTX’s creditors, even if there are unlikely to be any. have a lot.

As the crypto space is rocked by the aftermath of FTX’s collapse last week, exchanges rush allay investor fears.

FTX and Alameda have now filed for Chapter 11 in the United States – and it was about time, according to Temple Melville, CEO of the Scotcoin Project Community Interest Company.

He said AM City today, he is convinced that regulators will want to try to preserve something for creditors, even if there are unlikely to be many.

“FTX’s ongoing saga displays all the hallmarks of Russian TV news about Ukraine
“Special military operation,” Melville said.

“Now they say they were hacked and millions were stolen by third parties, and ‘FTX apps are all infected with malware,'” he added.

“Stop and think – billions are missing. Supposedly, somewhere between $10 billion and $50 billion. How not to know with a little more precision?

Temple Melville,

Melville continued, “How helpful to be able to say that a lot of money has gone elsewhere when it would certainly seem like a lot of it just got moved into the pockets of bad actors.”

He said, “There are a lot of things that happened,” including FTX allegedly using its FTT token as collateral and to pay for things — including Binance exiting its FTX investment.

Binance sought to recover the money by selling FTT and did a great job recovering what it could, Melville explained.

“There might be a bit of a conflict of interest here, but Binance has and had every right to crystallize and withdraw its investment in FTX,” he pointed out.

“The problem is that Alameda and FTX allegedly used FTT to invest in at least 50 other companies and
projects. Each of them must now be in serious trouble.

And, not only because of the decline in value and the lack of cash, but also in the alleged outright looting of other businesses.

“But, perhaps the second most egregious abuse of fiduciary power and responsibility was late in
September when FTX allegedly used $4 billion worth of FTT tokens – which had just been acquired – to “redeem” a
similar amount owed to Alameda,” Melville said.

“Fair enough you can say – except FTX registered it as a loan to Alameda and the next day it was returned to FTX, the ‘loan’ was extinguished and, uh, the Alameda loan as well. So, Alameda was ‘better off’ by $4 billion, as was FTX. Of course, neither statement appears to be true,” he continued.

Melville pointed out that “the main egregious abuse” of fiduciary responsibility was the alleged use of customer funds on the exchange to support the FTT, which was necessary to prevent the FTT from falling and leaving many black holes everywhere. .

“No matter what the actors in this drama say, these funds do not belong, do not belong and never belong to FTX itself.”

Mirror pension fund scandal

Melville recalled Robert Maxwell and the Mirror pension fund scandal, which changed pension oversight rules.

“In many ways, FTX’s use of client funds is analogous. I sincerely hope that US regulators tear everything to pieces and bring charges against those responsible.

“This is probably the best thing that has ever happened to crypto, because finally regulators will see that the same standards that apply to financial institutions and traditional builds must also apply to crypto,” he said. he declares.

Similarly, the proposed lifeboat for any future meltdown CZ discussed would be a very positive development to protect investors from losses, Melville continued.

“Gideon Greenspan said this almost eight years ago and was strongly condemned. But his thesis – central bank regulators and government treasury departments are not going to allow billions to be moved around without knowing who, to whom and where the funds are actually coming from – remains even more true today than ever before. she was not then.

“This will hopefully now trickle down to proper oversight of crypto exchanges and investor protection,” he concluded.

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