Ripple CTO Comments on FTX Collapse, Says it Can Happen Again With Other Exchanges Unless This Happens
As the sudden collapse of major crypto exchange FTX continues to ravage through the markets across the world, David Schwartz, the chief technology officer of U.S. blockchain company Ripple, believes that only enforcing a system of automatized checks and balances can prevent various crypto executives from repeating the mistakes of the exchange’s former CEO, Sam Bankman-Fried.
Ripple’s CTO believes that, if “you hold billions of dollars of other people's money for indefinite time periods, the temptation to speculate with those funds is irresistable if there aren't verifiable checks that make such risk-taking virtually impossible, nothing else will be sufficient.”
Regulatory oversight alone is unlikely to stop similar incidents from happening, according to Schwartz.
“Regulation that punishes after the fact won't catch it. Investor due diligence won't either. Of course, many people will say that it could be, and likely is, happening, but they'll be shouted down by accusations of sowing FUD or upsetting a system that is making people money,” according to the executive.
Schwartz concludes that, without enforcing a system that prevents crypto executives from taking extremely risky investment decisions while using their clients’ and investors’ money, this “kind of thing will always happen unless it cannot happen. The temptation is irresistable. That is one of the most important lessons of FTX. But most people will actively choose not to learn this lesson”.
FTX’s bankruptcy and the role player by Bankman-Fried in tanking his company has pushed many leading figures from the cryptosphere to reflect on the importance of transparent and responsible leadership by example.
Among others, ethereum (ETH) co-founder Vitalik Buterin recently
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