Waking up last week to the news of Sam Bankman-Fried’s arrest and criminal charges was a huge relief. This individual, once a leading and inspirational visionary of cryptocurrency’s potential to create financial freedom, has broken public trust.
Since the crash of FTX, my algorithmic trading engine company, which has never processed client funds but has helped them make trades on platforms like FTX, has received a response from hundreds of our customers who are currently unable to access their funds on the exchange.
People have called us crying, asking us how we can help them. “How can someone do this to us?” Painful. That is crime. But at least now justice is happening.
The Bankman-Fried charges and arrest are a positive development not only because they are part of a working justice and law enforcement system, but because it’s a sign of money. Electrons can survive the ongoing storm. For the crypto economy to survive, at a minimum, governments need to enforce fundamental laws in this area – as they did. final complete with charges against Bankman-Fried. But the government is taking too long to develop coherent regulations. As an industry, we can’t wait.
In addition to government enforcement, the industry needs to be more proactive and consistent in developing its own standards and a self-regulatory system. If the crash of FTX finally leads to these developments now, the cryptocurrency could thrive.
As the history of cryptocurrencies is written down, chroniclers will likely use November 11, 2022, to refer to the change in meaning of cryptocurrency and DeFi – “BFTX” and “ AFTX”, before and after bankruptcy and subsequent corporate infamy that many see as the best opportunity for crypto and DeFi to become “go mainstream.”
With the Bankman-Fried exchange demise, even former supporters are turning away from crypto, taking steps to limit or even ban its use. The Idea of Cryptocurrencies and DeFi as a Way Towards financial freedom and financial liberation from gatekeepers — formerly a popular topic in articles and blog posts — is increasingly being questioned.
However, those ideas are not dead. The negligence, bad practice, and possibly even outright fraud led to the demise of FTX—need to be separate from the principles that cryptocurrencies represent.
Those are the principles that have been spoken to billions of people around the world: the right to free commerce, to be free from a system that regulates not only how we can do business but also whether we can protect the full value of your income.
To allow those principles to thrive, the government doesn’t even need to build a new regulatory framework for the industry, it just needs to enforce the basic laws. In addition to the allegations against Bankman-Fried, recent news that US Department of Justice is weighing money laundering allegations against Binance, another major crypto exchange, are steps in the right direction. Law enforcement, rather than letting the sector disappear, with millions losing money, would go a long way to making it a legal space and protecting consumers from blatant fraud.
After a decade of talking about regulating cryptocurrencies, nothing has happened. Any government regulation can favor the traditional financial system, with a seemingly endless source of funding. boom and bust cycle administered by the Fed, to either promote growth or reduce inflation, as the gatekeepers see fit.
Instead, the various major players in the cryptocurrency industry need to come together and develop basic financial protocols, such as custody, risk management standards, and communication methods. full risk to the public. In addition, the industry needs to develop internal standards to enforce and monitor these financial protocols, as well as ensure transparency in other parts of operations. We have seen similar successful efforts towards operating standards in many other industries, including 5G and Internet. This will give the average person more confidence, security, and understanding.
Friedman’s arrest isn’t just the first step to bringing him and the FTX to justice. It will help create a viable cryptocurrency sector – and deliver on the ideals of freedom and transparency on which the industry has been built.
Dmitry Gooshchin is COO and Co-Founder of endoscopic technology.
Opinions expressed in the comments sections of Fortune.com are those of the author only and do not necessarily reflect the views and beliefs of Asset.
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