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In May 2022, Terraform Labs’ LUNA cryptocurrency and TerraUSD (UST) stablecoin collapsed, sending a huge shockwave through the cryptocurrency industry. Six months later, the bruised industry has taken another hit as one of the largest cryptocurrency exchanges, FTX, filed for bankruptcy protection, wiping out billions of dollars in user assets. His FTX empire, where he was once worth over $30 billion, has gone to zero in less than 10 days.
FTX reportedly has over 1 million creditors, most of whom are private investors who were confident FTX would not collapse and had their assets stored on exchanges. Looking at his Mt. Gox in 2014 (where creditors have yet to claim compensation), FTX may be repeating that mistake.
You could say that FTX succeeded because of Alameda Research and failed because of Alameda Research. An investigative report led cautious users to discover serious problems with Alameda’s balance sheet and dig deeper into unclear and unexplained financial transactions with FTX.
Many well-known venture capital and crypto companies have also been caught in trouble: Sequoia Capital, Temasek and others have announced that they will zero out on FTX investments. His crypto lending platform BlockFi has filed for bankruptcy due to its exposure to FTX. Also, cryptocurrency broker Genesis, a subsidiary of the Digital Currency Group, is on the brink of bankruptcy due to the liquidity crisis and may not be able to repay investors’ funds.
When the crypto tide receded, we knew who was swimming naked.
The collapse of FTX provides a rare opportunity for all users, practitioners and legislators to ponder the issue and reinvent the crypto industry.
Related: What Paul Krugman Gets Wrong About Cryptocurrencies
I don’t think the cryptocurrency itself should be blamed for the failure of FTX. This does not mean that the emergence of Bitcoin (BTC) and the cryptocurrency industry was a mistake. We should think about the business models that cryptocurrency exchanges operate and how to effectively decentralize governance.
An overturned cart in front is a warning to the carts behind. The exchange implosion is largely due to opaque funding disclosures. We have confirmed that major cryptocurrency exchanges such as Binance, OKX and Huobi Global have announced funding reserves to prove their security to ensure the interests of their users.
The shock of FTX’s bankruptcy still needs a lot of time to digest and the crisis won’t stop here, but I believe in the crypto industry’s unstoppable momentum.
The crypto industry has its ups and downs as it develops, but its future looks promising. 2022 will be a particularly tough year for the cryptocurrency industry, but it will continue to grow, evolve and find its way out in skepticism.
Related: From The NY Times To WaPo, The Media Is Indulging In Sam Bankman-Fried
With the COVID-19 pandemic raging and a global wave of interest rate hikes, the crypto winter could be harsher and longer than expected. We can’t predict and estimate exactly how long it will last, but together we can overcome the difficulties.
As a journalist who has worked at the forefront of the industry for many years, I have learned some profound lessons, from the crash of LUNA to the fall of FTX.
Personally, I am a cryptocurrency enthusiast and supporter with a long-term vision for blockchain technology. The crypto industry has faced its darkest times time and time again. I hope to regain trust and confidence in the industry without destroying it.
After the FTX accident, cointelegraph chinese was the first to organize several Twitter space conversations to invite cryptocurrency veterans to discuss the impact and lessons of the collapse.
as a platform cointelegraph chinese wants to provide Chinese-speaking users with the most timely and high-quality crypto news to help them grow.
In addition, cointelegraph chinese Always committed to helping and guiding crypto users in establishing the right scientific values while promoting further development of the crypto space and Web3.
Finally, a classic quote from the great philosopher Friedrich Wilhelm Nietzsche about people who keep building.
Tracy Chan CEO of cointelegraph chineseAfter graduating from Zhengzhou University, entered the Department of French Studies at the Sorbonne University in Paris.
This article is for general information purposes and is not intended, and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent the views or opinions of Cointelegraph.
