Fall from former crypto exchange FTX has the entire industry in disarray since the situation began to unravel a few days ago declared bankruptcy on November 11 New op-ed United States Senator Elizabeth Warren revealed a negative attitude towards the industry regarding the fallout.
Warren wrote that the crypto industry is on a “well-trodden path of financial innovation” that begins with exciting rewards but ends with “crippling losses.” She compared it to the subprime mortgages of 2008, penny stocks and credit-default swaps.
The senator said what happened with FTX should be a “wake-up call” for regulators to enforce laws in the industry.
On Twitter, some agreed with the senator, tweeting that the crypto industry is all “smoke and mirrors” and that Warren is trying to warn the public all along. Although many pointed the finger at her, saying regulators don’t understand the industry and are stoking fear with comments like this.
One user pointed out the middle ground that there is room for regulation when it comes to centralized exchanges that differ significantly from crypto technology and decentralized exchanges.
Centralized crypto exchanges are a far cry from cryptocurrency technology. Know the difference and only regulate centralized exchanges. The risk is centralized exchanges, not crypto and not decentralized exchanges/finance. Crypto didn’t fail. SBF failed. The SEC failed.
— Steve Westhoff (@SteveWesthoff) November 22, 2022
The following day, without specifically mentioning the op-ed, Binance co-founder and CEO Changpeng “CZ” Zhao also tweeted on the topic that where there is progress, there is always failure.
Some (myself included) say it will “set the industry back a few years”. But thinking about it, that’s natural. As you progress, there will be setbacks. It happened in regulated TradFi in 2008, after more than 70 years of development. The industry will quickly recover and strengthen.
— CZ Binance (@cz_binance) November 23, 2022
In response to CZ’s tweet, many in the community said that this is it reset the need for cryptocurrency.
On November 16, Warren along with Senator Richard Durbin published a letter they sent to former and current CEOs of FTX — Sam Bankman-Fried and John Jay Ray III. The letter contained 13 requests for documents, lists and responses regarding the situation.
Warren has been a major critic of the crypto industry over the past year. She had before called DeFi “dangerous” and was active to exhibit unsustainable practices in cryptocurrency mining scene in the US
Her latest op-ed also addresses these topics, along with the role of cryptocurrencies in money laundering and ransomware attacks.