NEW YORK/LONDON : A week of turmoil culminating in major crypto exchange FTX filing for bankruptcy has left investors questioning the viability of a sector already bruised by the bitcoin bubble bursting and closures of key market players.
"The fallout from FTX isn't something that'll be resolved in hours," said Antoni Trenchev, co-founder of crypto lender Nexo. "From a financial side, it's fair to say that confidence is going to be somewhat shaken because if you can't trust FTX then what can you trust?" Yat Siu, co-founder of Hong Kong-based investor Animoca Brands, told Reuters on Wednesday.
Unlike traditional corporations and financial firms, crypto entities operate in a regulatory gray area. For instance, deposits at crypto lenders are not insured by the government. In the case of FTX, U.S. residents cannot trade on its global platform due to strict regulations for the crypto space in the United States. FTX has a U.S. partner, FTX.US, but its offerings are more limited than the global platform.
"The show must go on, the industry needs to keep growing, but it's definitely a step-back in itself when you see the poster child of the industry being put in this position," said Jean-Marie Mognetti, chief executive of crypto asset manager CoinShares.
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