Cryptocurrency exchange FTX collapsed last week, and enthusiasts in the UK believe the failure will hugely impact the industry.
Ian Taylor, the executive director of the industry group Crypto UK, informed Members of Parliament (MPs) in the United Kingdom that FTX’s collapse will hugely impact the broader cryptocurrency sector.
Taylor mentioned this while addressing the Treasury select committee on Monday, November 14th. He stated that;
“What we’re hearing … is that the majority of the funds in that platform were from institutional investors. Now, there are many UK-regulated crypto exchanges that take retail money, and they are, at the moment, hopefully OK. We’ve not seen anything. But … this is a super fluid situation.”Ian Taylor – Crypto UK
Financial institutions have started revealing the extent of their losses in the FTX and Alameda Research collapse. Travis Kling, head of crypto hedge fund Ikigai, revealed that his fund had recorded huge casualties following FTX’s bankruptcy filing. Kling said;
“We had a large majority of the hedge fund’s total assets on FTX. By the time we went to withdraw Monday [morning], we got very little out. We’re now stuck alongside everyone else. There’s a lot of uncertainty about what’s going to happen next … At some point, we’ll be able to make a better call on whether Ikigai is going to keep going or just move into wind-down mode.
It’s hard for me to imagine the space bouncing back quickly from this ordeal. Too many got burned too hard. It’s obvious now that the space has not done enough to identify and expel bad actors. We’re letting way too many sociopaths get way too powerful, and then we all pay the price.”Travis Kling – Crypto Hedge Fund Ikigai
While many in the crypto industry are calling for more regulation of companies in the crypto space, Tim Grant, head of Europe, the Middle East and Africa at the crypto investors Galaxy Digital, believes that the changes shouldn’t be too many as that would disrupt the growth recorded by the sector so far. Grant said;
“I think it would be very wrong to tar the entire industry, by this one bad apple, which happened to be a very big apple. We’ve lost $77m at this point, which we don’t feel good about. But primarily, the users were institutional, and also the equity investors were among the most sophisticated and largest investors in the world. So there were a lot of very experienced eyes on this, and what it tells us is that this was a bad actor who was doing things behind very closed doors that we had no view into as a broader group.”Tim Grant – Galaxy Digital
He likened FTX’s collapse to that of Bernie Madoff, highlighting that those failures happened in regulated sectors.
FTX filed for bankruptcy last week after its FTT token lost more than 95% of its value within the space of a few days.