Kevin Helms
A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of finance and cryptography.
Ripple CTO Says Important Lesson From FTX Meltdown ‘Will Not Be Learned’ – Featured Bitcoin News
A Ripple executive says there is an important lesson from the collapse of the crypto exchange FTX that he “can say with full confidence that he will not learn.” The executive added: “Regulation that punishes after the fact will not catch it. Neither will investor due diligence.”
A lesson from the FTX collapse that will not be learned
Ripple Labs CTO David Schwartz shared his thoughts on the collapse of cryptocurrency exchange FTX in a series of tweets on Monday. FTX filed for Chapter 11 bankruptcy on November 11.
While noting that several lessons should be learned from the FTX fiasco, the Ripple CEO said:
It’s an important lesson that’s really quite obvious in retrospect, and one that I can confidently say will not be learned.
He explained: “If you hold billions of dollars of other people’s money for indefinite periods of time, the temptation to speculate with those funds is irresistible if there are no verifiable controls that make such risk-taking virtually impossible, nothing else will suffice. “
Schwartz emphasized:
Regulation that punishes after the fact will not catch it. Neither will investor due diligence. Of course, many will say it can happen, and probably does, but they will be called down by accusations of sowing FUD or disrupting a system that makes money off people.
“Things like this will always happen unless it can’t happen,” he stressed. “The temptation is irresistible. That is one of the most important lessons of FTX. But most will actively choose not to learn this lesson because of, among other things, the elephant in the room.”
FTX is currently being investigated by a number of authorities worldwide. 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 for allegedly mishandling customer funds, among other charges. Turkey’s financial intelligence unit has also launched an investigation into FTX and the Bahamian securities regulator has attempted to seize FTX’s cryptocurrencies.
Ripple Labs is currently engaged in a protracted lawsuit with the SEC. The securities regulator sued the company, its CEO Brad Garlinghouse and co-founder Chris Larsen over the sale of XRP, claiming the crypto token is a security. Garlinghouse expects an answer in the first half of 2023. The Ripple CEO recently said that the crypto industry will be stronger after the FTX fiasco if we continue to focus on transparency and trust.
What do you think of Ripple CTO’s comments? Let us know in the comments section below.
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