FTX boss Sam Bankman-Fried says Crypto World must act more responsibly

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The cryptocurrency industry needs to prove it is responsible and does not demand very strict regulations, according to Sam Bankman-Fried, a 29-year-old crypto billionaire.

Bankman-Fried, who co-founded the FTX crypto exchange, criticized crypto crooks in an interview with Insider last week, saying they pushed lawmakers to want to crack down on the industry.

Regulators and governments around the world are stepping up their scrutiny of the crypto world, following a digital asset boom in 2020 and 2021. Lawmakers such as Senator Elizabeth Warren have argued that cryptocurrency trading highly volatile poses great risks to consumers and requires more monitoring.

Bankman-Fried told Insider he takes regulation “extremely seriously” and that this is his main goal, especially in the wake of the global regulatory crackdown on Binance, an exchange that offers derivatives similar to FTX .

“I just wish the industry, as a whole, would do a more conscientious job of interfacing with regulators,” he said, adding that players in the crypto space need to be “accountable and show that they don’t need to have too many paternalistic regulations. “

He added: “Whenever there is a scam in crypto, regulators will push regulators to further lock down the industry.” His comments came weeks after hackers took $ 610 million from a crypto platform, before returning everything. The Federal Trade Commission said in May that reports of crypto scams had skyrocketed in 2021.

Read more: 29-year-old crypto-billionaire explains how investors can use Tesla or Apple stocks as collateral to buy bitcoin or ether

Bankman-Fried founded FTX, which is now the fourth largest crypto exchange by volume, in 2019. It specializes in cryptocurrency derivatives, products that allow traders to bet on the direction of tokens like bitcoin without actually owning the underlying asset. A funding round in July valued FTX at $ 18 billion.

FTX has tried to show it is responsible by reducing the leverage traders can have on the platform by 100 to 20 times, Bankman-Fried said. Leverage allows traders to borrow money to generate higher returns, but it can also lead to big losses.

But he said that to effectively regulate crypto, watchdogs and crypto companies will need to work together. He said there is a risk that overly strict regulation will add a lot of friction to the use of crypto, “by killing the use in the first place.”

Regulators are still figuring out exactly how they will tackle the sprawling industry, given the diversity of assets and technologies that fall under the broad ‘crypto’ category.

Securities and Exchange Commission (SEC) Chairman Gary Gensler called on Congress to give the SEC more oversight over trading platforms and signaled that crypto lending products could fall under the jurisdiction of the dog on call.

Bankman-Fried said the crypto world is increasingly aware that it must present a professional front, citing the ultimately futile efforts to fight a tax reporting requirement in the U.S. infrastructure bill during the last few weeks.

“There was a lot of talk going on then, and probably should have happened a lot sooner, about how we should behave as an industry.” He said the aim is to be “allies rather than enemies of the regulators”.

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