LONDON, Oct 1 — The collapse of cryptocurrency platform FTX, whose disgraced former boss goes on trial this week, sparked shock waves worldwide, with regulators still seeking to get to grips with the sector.
Investors pulled their money as the rumours snowballed, sinking FTX into bankruptcy and making Bankman-Fried a financial pariah. “I’m seeing the crypto collapses from last year like dominos” following FTX, said Erica Stanford, a fintech specialist at law firm CMS.“Many were clear Ponzi schemes,” Stanford told AFP, referring to pyramid investment scams designed to con consumers with the lure of a quick buck.
US prosecutors accuse Bankman-Fried of diverting funds from FTX clients, but also wire fraud, securities and commodities fraud, and money laundering. “Capital is scarce in crypto these days,” said Banafsheh Fathieh, general partner at US digital asset investment group Faction.