• Home
  • Economics
    • Scarcity
    • Opportunity Cost
    • Goods and services
    • Market and economic systems
    • Economy
    • Production
    • Factors of production
    • Production function
    • Equilibrium
    • Economies of scale
    • Economies of scope
    • Efficiency
    • Productivity
    • Comparative advantage
  • Microeconomics
    • Utility
    • Supply and demand
    • Elasticity
    • Economic surplus
    • Consumer surplus
    • Producer surplus
    • Market failure
    • Market structure
  • Macroeconomics
    • GDP
    • Economics GDP Formula
    • GNP Formula
    • NDP
    • National income
    • Disposable income
    • Aggregate demand
    • Aggregate supply
    • Unemployment
    • Inflation
    • Interest rate
    • Business cycle
    • Central bank
    • Investment
  • Guest Post
Tuesday, March 28, 2023
  • Login
EconGuru
  • Business
    • All
    • Accounting
    • Entrepreneurship
    • Management
    • Marketing
    • MBA

    Easy Ways to Ramp Up Security for Your Small Business

    3 Things You Should Know Before You Start a Web Design Firm

    5 Ways to Make Money When You Are Disabled

    5 Business Ideas You Can Run From Anywhere In The World

    5 Best Books to Learn Stocks Trading: Study for Successful Investing

    6 Best Real Estate Books to Get You a Solid Education In Real Estate Investing

    Must-Read 5 Best Business Books For Men And Women Who Love Success!

    How to Start Your Embroidery Business at Home – Make Big Bucks at Home

    5 Reasons Why You Should Invest in Real Estate if Not Now

  • Economics
    • All
    • Basic Economic Concepts
    • Economic Data
    • Economic Mathematics
    • Economics Diagrams
    • Economics Education and Careers
    • Environmental Economics
    • International Economics
    • Macroeconomics
    • Microeconomics

    How to Study for an Economics Exam

    Top 100 Dataset Websites & Sources for 2021

    “Capital in the Twenty-First Century” – a comprehensive master piece on world Economy and the reign of inequality

    Freakonomics: a book for unconventional thinkers and practical millenial economist

    Is the Study of Economics Truly a Science?

    What is Your Contribution to National Income?

    The Money Supply: Why We Shouldn’t Just Print Money

    Russia Learning That Keynesian Economics Don’t Work

    Labor Force Participation Rate More Important Than Unemployment

    Trending Tags

    • Finance
      • All
      • Basic Financial Concepts
      • Corporate Finance
      • Personal Finance

      Best 4 Personal Finance Software on Amazon

      The best invoicing softwares for small businesses

      5 Best Invoicing Software for Small Businesses

      Cryptocurrency: In Light of the Increased Volatility, Is It Worth the Risk?

      debt collectors

      4 Things You Should Do if You’re Being Harassed by Debt Collectors

      Choosing a Stock Broker Online

      What Should I Ask a Photo Booth Vendor Before Booking?

      The Total Money Makeover, a Must Read Ultimate Guide to Money Management

      The’Blue Chips’

      Quoted Shares and Stock Exchange

      Trending Tags

      • Insurance
      • Investing
      • World
        • Markets & Industries
        • Public Economics & Finance
      No Result
      View All Result
      Write for Us
      EconGuru
      • Business
        • All
        • Accounting
        • Entrepreneurship
        • Management
        • Marketing
        • MBA

        Easy Ways to Ramp Up Security for Your Small Business

        3 Things You Should Know Before You Start a Web Design Firm

        5 Ways to Make Money When You Are Disabled

        5 Business Ideas You Can Run From Anywhere In The World

        5 Best Books to Learn Stocks Trading: Study for Successful Investing

        6 Best Real Estate Books to Get You a Solid Education In Real Estate Investing

        Must-Read 5 Best Business Books For Men And Women Who Love Success!

        How to Start Your Embroidery Business at Home – Make Big Bucks at Home

        5 Reasons Why You Should Invest in Real Estate if Not Now

      • Economics
        • All
        • Basic Economic Concepts
        • Economic Data
        • Economic Mathematics
        • Economics Diagrams
        • Economics Education and Careers
        • Environmental Economics
        • International Economics
        • Macroeconomics
        • Microeconomics

        How to Study for an Economics Exam

        Top 100 Dataset Websites & Sources for 2021

        “Capital in the Twenty-First Century” – a comprehensive master piece on world Economy and the reign of inequality

        Freakonomics: a book for unconventional thinkers and practical millenial economist

        Is the Study of Economics Truly a Science?

        What is Your Contribution to National Income?

        The Money Supply: Why We Shouldn’t Just Print Money

        Russia Learning That Keynesian Economics Don’t Work

        Labor Force Participation Rate More Important Than Unemployment

        Trending Tags

        • Finance
          • All
          • Basic Financial Concepts
          • Corporate Finance
          • Personal Finance

          Best 4 Personal Finance Software on Amazon

          The best invoicing softwares for small businesses

          5 Best Invoicing Software for Small Businesses

          Cryptocurrency: In Light of the Increased Volatility, Is It Worth the Risk?

          debt collectors

          4 Things You Should Do if You’re Being Harassed by Debt Collectors

          Choosing a Stock Broker Online

          What Should I Ask a Photo Booth Vendor Before Booking?

          The Total Money Makeover, a Must Read Ultimate Guide to Money Management

          The’Blue Chips’

          Quoted Shares and Stock Exchange

          Trending Tags

          • Insurance
          • Investing
          • World
            • Markets & Industries
            • Public Economics & Finance
          No Result
          View All Result
          EconGuru
          No Result
          View All Result

          Home Index Cryptocurrency Lessons We Knew and Should Have Learned From The FTX Saga

          Lessons We Knew and Should Have Learned From The FTX Saga

          Stephanie Maina by Stephanie Maina
          November 22, 2022
          in Cryptocurrency
          0 0
          A A
          0
          Share on FacebookShare on TwitterShare on LinkedinShare on RedditShare on WhatsappShare by Email

          The crypto industry is far from taking major hits. Previously Terra, Three Arrows, and many other leading firms in the industry imploded, and the industry experienced the FTX saga. Sam Bankman-Fried’s fall from grace after the collapse of FTX, the saga renewed the famous meme “Hold my beer.”

          It was previously revealed that SBF left a $10 billion hole in one of the most trusted crypto exchange platforms, FTX. It might take some time before the public is made aware of how much the damage is and what exactly happened.

          You might also like

          Six Days of Terror in Crypto: The Timeline of the FTX Collapse

          Six Days of Terror in Crypto: The Timeline of the FTX Collapse

          November 16, 2022
          The FTX Collapse Explained

          The FTX Collapse Explained

          November 16, 2022

          Trusted Third Parties are Security Holes

          Satoshi Nakamoto published the Bitcoin Whitepaper 14 years ago and he outlined a blueprint for “a purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” However, crypto did a full circle and most of its trading activities took place in centralized exchanges.

          Satoshi’s main aim for creating Bitcoin was to eliminate the use of third parties from the financial systems. It was believed that Satoshi’s idea was wonderful and many people backed him up. Unfortunately, he wasn’t the first person to come up with this genius idea. In 2001, Nick Szabo published an article titled, “Trusted Third Parties are Security Holes.” In this article, he explained the dangers of building financial systems that depend on third parties and the need to build systems that aren’t.

          Eventually, Satoshi created an alternative, Bitcoiners understood his idea, held onto it and publicized it to the masses. “Not your keys, not your coins” became a mantra for the space, aiming for the need to self-custody crypto instead of relying on centralized intermediaries. Still, many chose to ignore the advice despite numerous warnings such as the Mt.Gox and QuadrigaCX blowups in 2014 and 2019. In 2022, crypto enthusiasts and veterans have had their fortune wiped out by other crypto scams involving crypto exchanges and lending platforms.

          Not only did people choose to not vet and ‘verify’ these platforms, but they blindly trusted these untransparent and risky businesses. Billions of dollars were stolen by egomaniacs, while the crypto industry did nothing to end this. People acted all shocked–as if Satoshi had not pointed out these risks in his article.

          The worst part about this whole FTX debacle is all the red flags were there for all to see.

          The Red Flags in the FTX Saga

          Sam Bankman-Fried, commonly known as SBF in the crypto circle made his way into the industry in 2019 after founding FTX. He quickly rose to fame and became a darling to the media without showcasing any proof of his previous works. By 2022, he had reached billionaire status after his wealth was valued at $32 billion.

          SBF spent the entire 2022 period plastering his image on billboards advertising FTX, interacting with politicians, and lobbying for the regulation of the Digital Commodities Consumer Protection Act (DCCPA) bill, that if enacted, would kill decentralized finance. In simple words, he weaseled his way to the top and wanted to sabotage other key players in the industry.

          SBF oversaw FTX, while Alameda Research was led by Caroline Ellison. She is a 28-year-old with only 19 months of prior experience as a junior trader at Jane Street. In 2021, Ellison sparked controversy when she tweeted “Nothing like regular amphetamine use to make you appreciate how dumb a lot of normal, non-medicated human experience is,”

          Caroline Ellison worked with Bankman-Fried to head FTX and Alameda Research. However, she made a controversial tweet about the use of amphetamines that people believed played a key role in the scandal.
          Ellison Controversial Tweet

          A year later, Ellison found herself at the epicenter of the FTX scandal. The scandal revealed that SBF moved $10 billion in customers’ money. His reason for doing this was to save Alameda from its impending insolvency crisis. Sadly, many more shenanigans from the two might surface while others may not.

          Unfortunately, there are still many red flags across the industry.

          We Simply Never Learn

          The FTX collapse is nothing new. This is why Satoshi invented Bitcoin to eliminate the abuse of money, power, and trust. The collapse of Mt. Gox, QuadrigaCX, Voyager Digital, Celsius, FTX, and BlockFi are just the same cycles repeating themselves. The crypto industry is reproducing the worst aspects of the finance industry that it sought to do away with. Fortunately, the government and central bank balance sheets won’t be there to cushion the blow as has been in the conventional world.

          Crypto enthusiasts received the “I told you so” and “crypto is a scam” statements from the noncoiners. However, it’s important to note that FTX was a regulated business under the full law and laws and regulations. These same laws promote the same off-shore jurisdictions politicians that promote these nonsense mantras leverage to hide their wealth. In other words, FTX, a regulated business did something illegal but the irony is the regulators never caught them in the act. Weird, right?

          Two Lessons to Be Learned in the FTX Fiasco

          Binance CEO, Changpeng “CZ” Zhao took to Twitter to share two major lessons after the collapse of FTX. He stated that a firm should not use its token as collateral. He added that Binance never uses its token as collateral. FTX’s liquidity issues came from CZ’s tweet on November 6 saying that Binance would be liquidating its holdings of FTX Token. Binance does not fully disclose what reserves it uses as collateral. However, CZ claimed that he would soon share with the public about their reserves.

          Zhao's tweet explaining his two key takeaways after the collapse of FTX.
          Zhao’s tweet explaining his two takeaways from the FTX saga

          CZ’s second lesson was that businesses should not be borrowing and instead should opt to maintain large reserves. This statement was made in reference to FTX’s sluggish withdrawals that were evident on November 7. Eventually, this sparked rumors that the firm did not have enough money to cover user funds.

          Cryptocurrency is a risky investment and should be treated as so. With the collapse of FTX, it’s evident that those who lost failed to learn from the lessons they already knew: don’t ignore red flags; don’t trust, verify; and always self-custody your assets.

          Tags: BitcoinbusinesscryptoCrypto marketFTTFTXInvestinginvestmentliquiditySBFZhao
          Previous Post

          Six Days of Terror in Crypto: The Timeline of the FTX Collapse

          Next Post

          5 Ways to Make Money When You Are Disabled

          Stephanie Maina

          Stephanie Maina

          Stephanie is a Kenyan-based freelance content writer. She offers ghostwriting and article/content writing services. Most days, you will find her working as a freelance virtual assistant working on client articles, social media management, and more. She writes on a variety of topics such as business, health, beauty, and many more, but most importantly she is always ready to learn and write on different subjects.

          Related Stories

          Six Days of Terror in Crypto: The Timeline of the FTX Collapse

          Six Days of Terror in Crypto: The Timeline of the FTX Collapse

          by Stephanie Maina
          November 16, 2022
          0

          The past week has been the most nerve wracking for the crypto industry. FTX went from being a world renowned...

          The FTX Collapse Explained

          The FTX Collapse Explained

          by Stephanie Maina
          November 16, 2022
          2

          If you have been paying attention to Finance news, you are more likely to be seeing this 'alphabet soup' SBF....

          NFTs in Business

          What are NFTs and How Can Businesses Benefit from them?

          by Stephanie Maina
          October 4, 2022
          0

          Have you heard people rave about non-fungible tokens (NFTs)? Have you heard them state that they can be used in...

          7 Incredible Strategies of Using NFTs in Business and Marketing

          7 Incredible Strategies of Using NFTs in Business and Marketing

          by Stephanie Maina
          August 26, 2022
          2

          There is nothing that can leave you confused and wondering, "Uh, what's all this?" like a flood of blockchain news....

          Next Post

          5 Ways to Make Money When You Are Disabled

          What is EconGuru?

          EconGuru

          EconGuru was founded in 2006 by a group of Economics students who are passionate about learning and sharing everything in Economics, Finance, and Business.

          The mission is to improve economic and financial literacy of the general public so people can better understand and react to economic problems and make good financial decisions.

          We have no social profiles on any network, and if you like us, bookmark EconGuru.com or share us with your friends.

          • Economics
          • Macroeconomics
          • Microeconomics
          • Useful Links

          © 2006 - 2022 EconGuru - Your premium guide for Economics, Finance, and Business. Privacy

          No Result
          View All Result
          Write for Us
          • Banking
          • Books & Textbooks
          • Business
            • Accounting
            • Entrepreneurship
            • Management
            • Marketing
            • MBA
          • EconGuru
          • Economics
            • Concepts
            • Microeconomics
            • Macroeconomics
            • Economic Data
            • Economic Mathematics
            • Economics Diagrams
            • Education and Careers
            • Environmental Economics
            • International Economics
          • Finance
            • Concepts
            • Corporate Finance
            • Personal Finance
          • History of Economics
            • Economists
          • Insurance
          • Investing
          • Markets & Industries
          • Public Economics & Finance
          • World Economy
          • Login

          © 2006 - 2022 EconGuru - Your premium guide for Economics, Finance, and Business. Privacy

          Welcome Back!

          Login to your account below

          Forgotten Password?

          Retrieve your password

          Please enter your username or email address to reset your password.

          Log In
          Are you sure want to unlock this post?
          Unlock left : 0
          Are you sure want to cancel subscription?