- After sending shockwaves through the crypto community, Sam Bankman Fried’s FTX has filed bankruptcy.
- Fears that it will collapse again have sparked concerns about other crypto companies, in a Lehman moment.
- Here are the opinions of experts such as Larry Summers, Carl Icahn, and Jeremy Siegel on the risks.
Sam Bankman-Fried’s FTX sudden and spectacular implosion this week has put the world of crypto on edge — wondering who’s next and whether this is the $1 trillion market’s Lehman moment.
Digital-asset trading was once worth more than $30 billion Filled for bankruptcy Friday. Friday was a chaotic week that included new details about FTX’s financial woes. A crisis of confidence was triggeredIn crypto
Binance made a surprise announcement Tuesday, stating that it had signed a potential agreement for a Deal to rescue its rival FTX. Rumours of insolvency have been sparked by a CoinDesk ReportThe exchange’s customers were able to withdraw $6 Billion in less than 72 hours.
But then Binance backed away after a review of FTX’s balance sheet, leaving Bankman-Fried to go begging for the billions of dollars it needed elsewhere — to no avail.
The fiasco has heightened regulators’ attention to FTX, driven a deep slide cryptocurrency, and gotten people making comparatives with Lehman BrothersIt is the bank that crashed in 2008 and was blamed for triggering the financial crisis.
Here’s what 10 experts think about the FTX disaster.
Larry Summers, ex-US Treasury Secretary
The Harvard economist professor stated that “What’s happening in crypto these last few days is going scare people” and was going to force regulators to take action.
Summers was The InformationAssess the possibility of FTX causing a Lehman-type meltdown.
Low because the banking system has become more capitalized than it used to be. Because the Fed has been on high alert. We have more precedent, and are ready to throw liquidity at any leaks, especially after the events of Covid’s early stages.
Carl Icahn is a billionaire investor and chairman of Icahn Enterprises
“I fear it could spill over. This is not the only danger in our economy. Icahn stated.
Mohamed El-Erian, chief economic adviser at Allianz
El-Erian said, “The good news about banks is that they are not part the payments and settlements system so we don’t have to worry too much about systemic effects.” CNBC.
“The irresponsible leverage that has been used, the cross-ownership of assets. This type of thing shouldn’t happen.”
The veteran economist stated that regulators would be playing “massive” catch-up. “What they are seeing, i suspect, will keep their eyes open at night,” he said.
Wharton professor Jeremy Siegel
“Is it a Lehman moment if the real world goes down?” No! Because it is actually more than half of the value that has already fallen, and the financial sector has survived very well.” Siegel spoke out about the crypto meltdown.
“One thing that is really important: When Lehman Brothers went bankrupt, I had money invested in money market mutual funds. I had money in banks, and all the rest. I thought, “Thank God, that’s the Fed backing these assets.” Crypto doesn’t have that.”
Changpeng Zhao, Binance founder, also known as “CZ”.
Binance’s boss stated that the global financial crisis was “probably an exact analogy” to the collapse of the rival exchange.
“With FTX falling, we will see cascading effect. Zhao explained that those living near the FTX ecosystem are most likely to be affected. According to the Financial Times.
Mike Novogratz is the CEO of cryptocurrency financial firm Galaxy Digital
“It has been a major blow to trust. Novogratz: Markets are about trust, trust in the system and trust in other counterparties. CNBC.
“And this tale is as old as time. A charismatic young man in Bermuda shorts and floppy hair charmed 20 of the most prominent investors in the world. He also charmed regulators, and was often the face of the entire system.” he said.
“In some ways this is worse for the infrastructure being built up to allow people to sell, lend, promote and buy coins. So it will be a setback. It won’t end cryptocurrency by any stretch,” he stated in a separate statement. Interview,
Michael Saylor, founder of Microstrategy and bitcoin bull, Michael Saylor
Saylor: “I believe the industry needs grow up, and regulators are coming in to this space.” CNBC.
“It’s going strengthen the hand of regulators, it’s going accelerate their intervention.”
Jeremy Allaire, CEO, fintech Circle, a small equity holder of FTX
“This whole market down cycle has allowed us to reflect on the deepest issues in this market. Allaire stated in a statement that the root causes of lack of transparency, counter-party visibility, project treasuries as well as balance sheets anchored with speculative tokens, were lacking transparency and lack of counter-party accountability. Tweet.
“Finally, I’m disappointed that a technology that was created in response to the Lehman Bros moment in 2008 has given birth to its own version. We can do better.”
Nikolaos Panigirtzoglou, JP Morgan strategist
Analysts stated that it was likely that a new wave of margin calls, deleveraging, and crypto company/platform failures would begin. This was stated in a note for clients.
“The crypto ecosystem is seeing a shrinking number of entities that have stronger balance sheets and can rescue people with low capital or high leverage.
