Coinsilium Group Ltd (AQSE:COIN, OTCQB:CINGF) has said it believes the FTX fiasco could prove to be a turning point for the blockchain and cryptocurrency industry.
The company, in a statement alongside the AGM results, noted that neither it nor any of its investees or advisory clients had any direct exposure to the FTX collapse, but chairman Malcolm Palle provided comments to investors in the wake of the crisis.
“We expect the outcome of this unfortunate event to result in further uncertainty for the broader digital asset markets, at least in the near to medium term,” Palle said.
“While the story is still unfolding, from what has come to light so far, the FTX fiasco appears to have been a story of multiple failures in risk management, investor judgment and due diligence, community scrutiny, and an oversight by certain Silicon Valley funds and their advisers in their support of young, inexperienced founders who superficially appeared to tick all the right boxes for their purposes.”
He added: “From a future point of view, we will no doubt look back on this event as a turning point for the industry and it has already become clear that there is an urgent need to implement more effective procedures and tools for monitoring trading and lending practices for centralized digital asset exchanges.”
Palle, meanwhile, described the centralized exchange model operated by the likes of FTX as relying on traditional financial technology and said such exchanges “effectively operate in a black box mode” where “client funds become difficult to track when deposited into an exchange’s multiple accounts and wallets.”
“We expect that this unfortunate event will now trigger an accelerated drive towards the design and enforcement of better practices for the digital asset industry globally, but this will undoubtedly take time to happen.”
As for its own operations, Coinsilium said it has a healthy cash position with £1.1m cash in the bank and approx. £1.3 million in crypto reserves (mainly held in Bitcoin and Ethereum).
“We continue to manage our resources pragmatically and our priority now is to ensure that we continue to stay on the right side of this difficult market cycle and that we are ready and prepared to resume growth when the cycle turns and more positive market conditions prevail, let Pallet to.
