FTX: What’s next, and why it can be a big step forward for crypto

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On December 13, 2022, Sam Bankman-Fried was arrested on charges related to the collapse of his crypto company, FTX.

FTX was one of the largest and most famous exchanges in the world, and its new CEO, John Ray, claims that the exchanges’ collapse was the result of poor management, a lack of internal controls and record keeping. Bankman-Fried says he hopes to make enough money to repay investors by launching new businesses, but confidence could be hard to restore.

Let’s start there, and more specifically, try to reframe the events in terms of the broader implications for the crypto industry.

The collapse of such a global and explosive time bomb as FTX removes a potential threat that it does not cause, because it was always meant to end that way. By exploding now, instead of later, exchange failure simply reduces the risk of something like this happening much later on a much larger scale.

As crypto enthusiasts and believers, we need to start looking at our own industry more critically. If we want crypto to succeed, i.e. have a better chance of being widely adopted than it currently is, we need to weed out the weeds of scammers and scammers from the grassroots itself which constitutes crypto as we know it today.

We need to get rid of bad managers, incompetent leaders and incompetent visionaries. Only then will we be able to discern if they actually know what they are talking about, or if they are just after dollar signs for dollar signs.

The future of the crypto space

It is high time for such a review to take place, and the collapse of FTX presents the prime opportunity. Once that’s done, and done well, we can start looking at which valuable, innovative, and genuinely trustworthy companies should have more room to grow within the industry. Again, the timing couldn’t be better. Nor could a redistribution of power be more necessary.

The main thing that key players in the industry will need to carefully consider is the issue of trust. Sam Bankman-Fried was close to lawmakers and regulators, and the very bill that had the most bipartisan support, and therefore the greatest chance of passing, was ironically an SBF itself had a hand. What does this mean for the future of crypto regulation? Now that it’s irrelevant and the industry is more hectic than ever, what does the future of the regulatory landscape look like?

Some regulatory tightening is inevitable. But maybe it’s a good thing too, because it can increase industry confidence and make investors feel safer, more protected. Perhaps the only concrete path to global adoption is really to restore trust by putting strong legal frameworks in place, so that a disappointment like FTX can never happen again.

Here is my hope, for 2023: that what will emerge from the ashes of FTX will be a more honorable, transparent and solid version of what we all thought it was; that the so-called crypto winter might be on its way to a spring thaw, and that the new year might be milder for the crypto space than 2022 was. I believe better and more deserving projects will come out of the FTX collapse, and I hope I’m right. Only time will tell.

About the Author: Daniele Servadei is co-founder and CEO of Sellix, an e-commerce solution that includes everything digital entrepreneurs need to create, grow, and manage their online store. This also allows them to accept crypto payments. The startup is based in Bologna, Italy.

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