The FTX Contagion with Jesse Powell - WBD583

Jesse Powell is the co-founder and Chairman of Kraken. In this
interview, we discuss the rising anger over the FTX collapse,
parallels with Mt. Gox, FTX’s exploitation of regulatory
arbitrage, odd mainstream media reactions, proof of reserves and
the future of custodial services.


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FTX has caused untold damage. There could be over 1 million
creditors, from large institutions to small retail investors.
There are going to be numerous heartbreaking stories of people
getting rekt. But, the most significant damage caused by this
criminality could be ahead of us. There is a significant risk
that a misreading of the causes of this crisis will lead to
regulatory damage removing access to Satoshi’s innovation for
future generations.


There are many within the industry who were deeply sceptical of
FTX and Sam-Bankman-Fried well before the event of the past few
weeks played out. The pace of growth, the scale of revenue, and
the huge expenditure. To those in the know, none of it made sense
unless FTX was involved in nefarious activities. And yet, SBF was
rubbing shoulders with DC politicians whilst shaping the laws to
be applied to the industry.


In short order, the whole facade has come crumbling down. Stories
of drug taking, polyamory, and excess within the criminal empire
have emerged, confessions have been made that the effective
altruism promotion was a sham, and then SBF engaged in a bizarre
media campaign via Twitter. FTX’s new CEO brought in to organise
its bankruptcy process stated in his 40 years of restructuring
companies (including Enron) he’s never seen anything as bad as
this.


So, in the face of this obvious narcissistic and incompetent
criminality, why have there been a number of puff pieces in the
media? Why did DC take the warnings that were made seriously? And
how is it justified for politicians to threaten a sweeping global
legal framework for Bitcoin and crypto? Strange things are
happening, and forces are being aligned against all of us. And
yet, we know the community is resilient. This could take years to
play out.