Ripple CEO says there is one important lesson from the FTX debacle that “he can say with absolute certainty will not be learned.” The chief executive added: “An ordinance that penalizes ex-post will not capture that. Even a thorough scrutiny of investors will not solve it.”
A lesson from the FTX collapse that cannot be learned
Ripple Labs CTO David Schwartz shared his thoughts on the collapse of cryptocurrency exchange FTX in a series of tweets Monday. FTX filed for Chapter 11 bankruptcy on November 11.
Ripple’s CEO noted that we should learn from the FTX fiasco:
There’s an important lesson here that’s actually pretty obvious in hindsight, and one that I can say with absolute certainty I won’t learn.
He explained: “When you hold billions of dollars in other people’s money for indefinite periods of time, unless there are verifiable controls that make such risk-taking virtually impossible, the temptation to speculate in those funds is irresistible, nothing.” other will suffice. “
An ordinance that punishes afterwards does not catch it. Even investor due diligence won’t solve it. Of course, many people will say it could happen and probably will, but they will be shouted down with accusations that they are spreading FUD or disrupting a system that makes people money.
“Something like this always happens, unless it can’t happen,” he stressed. “The temptation is irresistible. This is one of FTX’s most important lessons. But most people actively choose not to learn that lesson, in part because of the elephant in the room.”
FTX is currently investigating a number of authorities around the world. In the US, the Department of Justice (DOJ), the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are investigating the exchange over alleged misuse of customer funds, among other things. Turkey’s Financial Intelligence Unit has also launched an investigation into FTX, and the Bahamian Securities Commission has attempted to seize FTX’s cryptocurrencies.
Ripple Labs is currently in a lengthy legal battle with the SEC. The Securities and Exchange Commission has sued the company, its CEO Brad Garlinghouse and co-founder Chris Larsen for selling XRP, claiming the crypto token is a security. Garlinghouse expects a response in the first half of 2023. Ripple’s CEO recently said that if we continue to focus on transparency and trust, the crypto industry will be stronger after the FTX fiasco.
What do you think of Ripple’s CTO comments? Let us know in the comments section below.
Austrian business student Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the interface between economics and cryptography.
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