Waking up last week to the news of Sam Bankman-Fried’s arrest and criminal charges was a huge relief. This individual, once a leading visionary and inspiration for the potential of crypto to create financial freedom, has shattered public trust.
Since the collapse of FTX, my algorithmic trading tools company, which never managed clients’ money but helped them execute trades on platforms like FTX, has heard from hundreds of our clients who don’t can no longer access their funds on the exchange.
People called us crying, asking how we could help them. “How could someone do this to us?” It’s heartbreaking. It is criminal. But at least now justice is taking its course.
Bankman-Fried’s charges and arrest are a positive development not only because they are part of a functioning law enforcement and justice system, but because it is a sign that crypto can survive. to the current storm. For the crypto economy to survive, governments must, at a minimum, enforce basic laws in the sector, as they have eventually finished with the charges against Bankman-Fried. But the government is taking too long to develop consistent regulations. As an industry, we cannot afford to wait.
Beyond government enforcement, industry needs to be more proactive and united in developing its own standards and a system of self-regulation. If the collapse of FTX ultimately drives these developments now, the crypto can thrive.
When cryptocurrency history is written, columnists will likely use November 11, 2022 to refer to the change in what crypto and DeFi is: “BFTX” and “AFTX,” before and after bankruptcy and the subsequent fall from grace of the company that many saw as the best chance for cryptocurrencies and DeFi to “become mainstream.”
With the collapse of the Bankman-Fried exchange, even former advocates are turning their backs on crypto, taking steps to limit or even to prohibit Its use. The idea of crypto and DeFi as a path to financial freedom and the liberation of finance guardians – once a common theme in articles and blogs – is increasingly being questioned.
However, these ideas are not dead. the negligence, bad practices and possibly even outright fraud that led to the collapse of FTX should be separated from the principles the crypto stands for.
These are principles that speak to billions of people around the world: freedom to trade, free from the system that dictates not only how we can do business, but whether we can preserve the value of our earnings.
To allow these principles to flourish, the government does not even need to develop a new regulatory framework for the industry, it simply needs to enforce the basic laws. In addition to the charges against Bankman-Fried, the recent news that the US Department of Justice Weighing in on money laundering charges against Binance, another major crypto exchange, are steps in the right direction. Enforcing the laws, rather than letting the industry rot, with millions of people losing money, will go a long way to making it a legitimate space and protecting consumers from outright fraud.
After a decade of talking about crypto regulation, nothing has happened. Any government regulation would likely favor the traditional financial system, with a boom and bust cycle managed by the Fed, either to promote growth or to curb inflation, as they see fit.
Instead, the various major players in the crypto industry need to come together and develop basic financial protocols, like safekeeping money, risk management standards, and overall communication methods. risks to the public. Additionally, the industry must develop internal standards to enforce and oversee these financial protocols, as well as ensure transparency in other parts of its operations. We have seen similar successful operating standards efforts in many other industries, including 5G and the the Internet. This will give the average person more confidence, security and understanding.
Bankman-Fried’s arrest isn’t just the first step in bringing him and FTX to justice. This will help create a crypto industry that can survive and realize the ideals of freedom and transparency that the industry was built on.
Dmitry Gooshchin is the COO and co-founder of EndoTech.
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