A Ripple executive says there is one important lesson from the collapse of cryptocurrency exchange FTX that he “can say with complete confidence will not be learned.” The executive added: “Regulation that punishes after the fact will not catch it. Investor due diligence won’t either.”
A lesson from the FTX crash that will not be learned
Ripple Labs CTO David Schwartz shared his thoughts on the collapse of cryptocurrency exchange FTX in a series of tweets on Monday. FTX filed for Chapter 11 bankruptcy on November 11.
While noting that there are several lessons to be learned from the FTX fiasco, the Ripple executive said:
There is one important lesson that is quite obvious in hindsight and one that I can confidently say will not be learned.
He explained: “If you hold billions of dollars of other people’s money for indefinite periods of time, the temptation to speculate in those funds is irresistible if there are no verifiable controls that make it virtually impossible to take that risk, nothing else will suffice. ”
Regulation that punishes after the fact won’t catch you. Investor due diligence won’t either. Of course many people will say it could be happening, and it probably is, but accusations of seeding FUD or subverting a system that is making people money will scream at them.
“These kinds of things will always happen unless they can’t happen,” he stressed. “The temptation is irresistible. That is one of the most important lessons from FTX. But most people will actively choose not to learn this lesson because of, among other things, the elephant in the room.”
FTX is currently under investigation by various authorities around the world. In the US, the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) are doing research the exchange for the alleged mishandling of client funds, among other charges. TurkeyThe financial intelligence unit has also launched an investigation into FTX and the bahamas The securities regulator has been trying to seize cryptocurrencies from FTX.
Ripple Labs is currently involved in a lengthy lawsuit with the SEC. The securities regulator sued the company, its chief executive Brad Garlinghouse and co-founder Chris Larsen over the sale of XRP, asserting that the cryptographic token is a security. Garlinghouse awaits a response in the first half of 2023. The CEO of Ripple recently said that the cryptocurrency industry will be stronger after the FTX fiasco if we continue to focus on transparency and trust.
What do you think of Ripple’s CTO comments? Let us know in the comments section.
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