OPINION:
It won’t be the merriest of holiday seasons for the kids involved in the FTX saga. Caroline Ellison, Alameda Research’s former CEO, and Gary Wang, FTX co-founder, have already pleaded guilty to fraud charges “in connection with their roles in the frauds that contributed to FTX’s collapse,” according to Manhattan U.S. Attorney Damian Williams. On Dec. 20, FTX co-founder Sam Bankman-Fried signed extradition papers and started preparing to leave the Bahamas for the U.S., where he faces the possibility of up to 115 years in jail on wire fraud, securities fraud, money laundering and related conspiracy charges.
FTX’s fate may be sealed, for it will be remembered as the most explosive, surprising and disappointing collapse the cryptocurrency world has seen to date.
The future story of crypto itself, however, remains to be written.
The start of a new year is always a time for introspection and self-evaluation, and I believe the crypto industry needs to do some soul-searching after the events of 2022. With a foundational crack as major as the downfall of one of the largest exchanges in the world, we need to ask ourselves: Where is crypto going to go from here?
I believe it’s time for the industry to grow up and evolve into a more mature, more stable and more convincing version of the one we know today. Going into 2023, crypto projects big and small need to ask themselves what they can do to burst the bubble we seem to be living in — which is in great part comparable to the 2001 internet bubble the tech industry experienced — and help the sector as a whole transform the way we know it needs to.
People cannot distinguish between blockchain technology itself and clear abuses of it, such as in the case of FTX and many other con artists treating the innovation like a get-rich-quick scheme. It’s up to cryptocurrency enthusiasts and blockchain devotees to explain to the world the difference.
Because to anyone who really understands what crypto is about and why it will prove so disruptive to the world economy as we know it, the collapse of something as shady and undependable as FTX proves is the real value of decentralization, rather than the opposite.
Crypto was never meant to become what people like Mr. Bankman-Fried have tried to turn it into, and its reputation (and future) is suffering because of it. It’s up to crypto itself to become an environment that’s so pristine, so solid, so trustworthy, people will not be able to help change their minds about its value and viability.
More short-term trouble is still in store for the speculative crypto environment, and my hope is that by the time the market has had its way with the projects that were always destined to fail anyway, we might have a good starting point for transforming the industry. The legislation will undoubtedly come into play soon, and while regulators may feel pushed to overreact to the FTX debacle or simply misunderstand the heart of crypto, it remains to be seen.
But the industry cannot afford to wait and see what regulators do, nor can it rely excessively on passing trends and fads, and base a game plan on what the hype of the moment is. It’s time for us to get serious about what crypto can be and why what we’re seeing today is far from reaching its potential.
Soon, the world’s biggest companies will conduct safe and secure transactions on the blockchain, and verification based on decentralized services will become the basis of the migration from web2 to web3. In order to pave the way for this transformation, we need to make trust, transparency and reliability top priorities, and we need to make affairs like FTX a thing of the past.
In five years or so, the events unfolding now will be seen as the real turning point for an immature technology growing up, and we will remember this moment as the crossroads that crypto needed to face in order to uncover the necessary path forward. May we bring that energy into 2023 and see where it takes us.
• Lars Seier Christensen is chairman of Concordium and founder of Saxo Bank.
Please read our comment policy before commenting.