On Nov. 11, the U.S. branch of crypto exchanges FTX.US and FTX.X.X filed for Chapter 11 bankruptcy. In an apparent hack, more than $600million was taken out of FTX wallets. The Financial Times published FTX’s balance sheet the next day. It showed $9 billion of liabilities and only $900 million in easily-sold assets. The balance sheet showed poor and risky customer fund management.
Several prominent investors, business leaders, and government officials have commented on the still-unsolved collapse.
What do traditional finance leaders think
Charlie Munger is a long-standing partner in Warren Buffett and vice chairman of Berkshire Hathaway. Munger was interviewed by CNBC on November 15.
He said that he was saddened to see cryptocurrency-related people who were once considered very trustworthy. Berkshire Hathaway made a 2021 investment in Nubank, which is a digital bank in Brazil. However, the bank has been bearish in digital assets.
When asked if FTX investors had done due diligence, he replied, “I think they mean well, but there’s a lot delusion.” It’s partially fraud, but it’s also partly delusion. This is a terrible combination .”
Griffin is a billionaire and the CEO of Citadel hedge fund. He was interviewed on November 14th at the Bloomberg New Economy Forum. When asked about the implosion at FTX, Griffin blames in part the lack of crypto regulations.
“The turf war between American regulators must end. It is absurd that agencies dance around who has what, even though they are not naming them. The bottom line is that American investors are really being hurt. It’s hard to believe that a fraud this large has been committed and that no regulators have attempted to stop it span>
Citadel Securities works with other financial institutions to create their own cryptocurrency exchange.
… There was no accountability that I could see, and I still can’t see it.” … I couldn’t see any accountability, and it still doesn’t seem to be span>
Icahn said that although he had never purchased cryptocurrency, he might have “might’ve shorted it once”
What do crypto leaders think
Changpeng Zhao is the CEO of cryptocurrency exchange Binance. Zhao was one of the first to voice doubts about FTX’s financial health. Throughout the days leading to FTX bankruptcy filing, he tweeted several times, including Nov. 11, where he highlighted red flags investors can look out for.
“FTX aside, avoid businesses/exchanges/projects that:
– Are not profitable (musical seats)
– Using their tokens to survive
– High incentives to lock your tokens
– Have a large total supply but a very small circulation
– Contains loans”
Brian Armstrong, CEO at crypto exchange Coinbase, used Twitter to voice his opinions on FTX. Armstrong had previously called for greater regulation of FTX before the issues were revealed. He reiterated his concerns in a Nov. 9, tweet.
“FTX.com” was an offshore exchange that wasn’t regulated by SEC [Securities and Exchange Commission].
Because the SEC failed in its duty to provide clarity regarding U.S. regulatory matters, many American investors and 95% of trading activity went offshore, the problem is obvious.
“Punishing U.S. businesses for doing this is absurd.”
He tweeted the day before that Coinbase had not been exposed to FTX, its native currency FTT, or Alameda Research.
What do government officials think
Gary Gensler is the chair of U.S. Securities and Exchange Commission. He took part in an event on Nov. 9, hosted by the Healthy Markets Association. This organization monitors financial regulation.
Gensler stated that FTX had not yet filed for bankruptcy. A lack of disclosure, a lot leverage, a lot interconnectedness: It’s almost like Jenga blocks that are all built up and pulled apart, each one causing a little .”
Crypto leaders have criticized Gensler since then for not providing enough regulatory clarity to businesses.