Sam Bankman-Fried has tipped the cryptocurrency industry into crisis. But the spectacular implosion of FTX, the exchange he founded, has done the broader financial system a big favour. The curly-haired kingpin was at the forefront of pushing regulators and politicians to legitimise digital assets like bitcoin. His downfall will slow that process – and may even send it into reverse.
earlier this year, central-bank money can perform the same functions as crypto “except, perhaps, for money laundering and ransomware attacks.”
But this could have changed quickly if Bankman-Fried and his cohorts had continued their campaign. As Paul Tucker, the former deputy governor of the Bank of England,a Breakingviews podcast last week, regulators have tended to ignore unregulated corners of finance until they become systemically dangerous. But “by the time something is obviously a tangible threat to stability it’s got massive lobbying power”.
FTX filed for bankruptcy on Nov. 11, after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.
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Sam Bankman-Fried did financial system a favourThe curly-haired cryptocurrency kingpin pushed regulators and politicians to legitimise assets like bitcoin. A few more years and his now-bankrupt exchange FTX would have burrowed deeper into mainstream finance, amplifying the damage. His downfall sends the process into reverse.
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