It’s been an exhausting week trying to keep up with the chaotic news coming out on FTX. Here’s our latest crypto collapse update and analysis. This one is on David’s blog. [David Gerard]
While many people have been comparing the fall of FTX to Enron or Lehman Brothers, it’s really more like MF Global, a major global financial derivatives broker that went belly-up in 2011.
MF Global’s fatal flaw was the same as FTX-Alameda: They failed to segregate funds and used billions of dollars in customer money to cover up losses in trading.
Everyone should have seen this crash coming, especially the “sophisticated” venture capitalists who neglected to do due diligence on FTX and instead kept shoveling money into the fire, creating the myth of Sam Bankman-Fried, boy genius, in the process.
You should assume that every offshore crypto firm is like the failed Canadian exchange Quadriga — Zeppelins flying high, waiting for a single spark to set them off.
Image: Hindenburg exploding