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Crypto Exchange Founder Issues Warning To Avoid FTX-Like Repeat
The founder of a crypto exchange that once lost millions of dollars in the FTX collapse is warning the same risks are bubbling up again.
Backpack Exchange founder Armani Ferrante joined Coinage to shed light on why the same lack of transparency could once again lead to disastrous outcomes.
“It might kind of sound a little sad to say, but it does feel like we've forgotten a lot of the lessons of the last cycle,” Ferrante said. “And you're seeing new things that rhyme.”
One of the biggest issues Ferrante called out is a lack of transparency into the health of crypto exchanges. Many have launched their own tokens just as FTX once did. It’s unclear exactly how many of those exchanges might use the value of their own tokens in calculating the health of their finances. As was the case with FTX and its own FTT token, when the market turns all of those calculations can swing against an exchange in an instant.
“I think the one thing I would say is that being transparent or not being transparent is a choice,” he said, noting that exchanges can choose to make their risks clear or not for customers. “If somebody chooses the complicated and obscure way, it's usually because they're hiding something.”
Outside of exchanges, one of the most scrutinized trends in crypto has become the rise of digital asset treasury companies like Michael Saylor’s Strategy. As they grow larger and larger, many are worried that price flipping in the opposite direction could trigger a wave of selling that builds on itself. While that may not be the case for Saylor’s company, which has stacked an unmatched and healthy paper profit of nearly $30 billion dollars – it could eventually ensnare the younger copy cats.
“I don't know if it's digital asset treasuries or if it's another exchange collapse or if it's something else,” Ferrante said while trying to predict which spark could end the bull run this time. For exchanges that could potentially be caught off guard, Ferrante said he hopes history doesn’t repeat itself.
“There are non-fraudulent ways that you can go to zero and lose all the money,” he said.
This article has been published on thestreet.com via Yahoo News.
Crypto Exchange Founder Issues Warning To Avoid FTX-Like Repeat
Backpack Exchange founder Armani Ferrante is calling on crypto to once again value transparency
finance.yahoo.com
