Will the Cryptocurrency Market be Able to Survive after the FTX Collapse?

FTX Collapse effect on cryptocurrency

After the arrest and bail denial of Sam Bankman Fried- the former CEO of collapsed Crypto exchange FTX, the future of the crypto market is in debate. The entire money laundering and securities fraud due to this FTX collapse have led to over $8 billion in losses. 

However, analysts believe that despite this FTX collapse, the crypto market will survive and have a great future. They believe this crash will positively affect the crypto market, bringing new realism to the market with the support of government regulators.

According to the Power Trials Lawyer and the Founder of Barhoma Law, Matthew Barhoma, the arrest of Sam Bankman was long due and just a start. More charges against him and the people associated with him or the organization are expected in the coming days.

The CFTC and Securities Exchange Commission filed all the charges against Sam Bankman on Tuesday for violating securities and defrauding investors. Also, there are pending investigations against the other people associated with the FTX collapse. 

Indeed, the FTX crash significantly affected and declined the growth of major cryptocurrencies like Ethereum and Bitcoin. However, the currencies have started recovering, and as a result, the collapse has not triggered a larger ripple effect as expected by many investors.

While people still believe in cryptocurrencies, such crashes also concern them about the digital exchange platforms’ security and reliability. Because, at last, there is no actual commodity trade happening on paper. The transactions are happening in the digital world like light flashes crossing the computer.

Unlike traditional money lenders like regulated Banks, who offer very small interest on people’s investments, crypto lenders offer high investment returns. As a result, there are fewer laws and rules designed for crypto regulators regarding the capital they hold and what they do with customers’ assets. FTX collapse is just one significant result of it.

This crash has also revealed how interconnected these exchanges are with the trading firms. Reportedly, the FTX has loaned billions of dollars to Alameda Research trading firm to fund their risky bets. Not only FTX, but BlockFi, a popular crypto lender, has also lent a lot of money to the same trading arm.

Also read: Crypto Lender BlockFi files for bankruptcy post FTX collapse

The whole situation reflects the financial system’s vulnerability and lack of regulatory laws designed by authorities for crypto exchanges to govern the usage of customers’ digital assets in the right manner.

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