Pantera Capital CEO ties FTX collapse to unregulated status

The collapse of FTX does not signal a failure of blockchain technology or cryptocurrencies, as regulated exchanges continue to operate well. This view was voiced by Pantera Capital CEO Dan Morehead in a letter to investors.

“If you can’t trust FTX who can you trust?!”

The two-pronged answer is:

Regulated exchanges work great e.g. @coinbase, @Bitstamp

DeFi works great, specifically DEXs e.g. @Uniswap, @Balancer, @BreederDodo

Business is moving back to safe entities.

More: https://t.co/Ph0i9IuS9h pic.twitter.com/9E1v1fs0gO

— Dan Morehead (@dan_pantera) December 20, 2022

As an example, he cited Coinbase, Kraken and Bitstamp. According to Morehead, since October these platforms along with Upbit have increased their market share by 30%.

«This is the exchanges that, when a client sends them money, simply put it in the bank. A simple solution. Obviously, trading here will move to regulated venues», — the Pantera chief.

He also noted that licensed FTX subsidiaries such as LedgerX or the US unit were not affected by the liquidity crunch at the parent entities.

«This is a powerful symbol of why sensible regulation is beneficial for the industry — it protects investors, ensures disclosure and transparency», — stressed Morehead.

According to the Pantera founder, transparency and trust in the crypto industry will be advanced by a full audit from the Big Four. The promoted option Proof-of-Reserves is a partial answer, he believes.

Morehead noted that the real bankruptcy of FTX likely occurred much earlier. He cited an interview with Sam Bankman-Fried in which the exchange founder admitted that problems at the affiliated trading firm Alameda Research emerged as early as May, after the Terra ecosystem collapse.

However, he reportedly learned of them only weeks later. The former FTX CEO attributed the lack of proper financial and accounting records to the absence of adequate financial and accounting controls. Any audit would have uncovered this, Morehead noted.

«The narratives spread by blockchain skeptics, as well as some regulators and policymakers, miss the point. The FTX collapse is not connected to distributed ledger technology. It wasn’t cryptocurrency that failed. Bitcoin and all other protocols are functioning well», — emphasized he.

In this regard, he also noted the unregulated DeFi space. In his view, leading players such as Uniswap, 0x, 1inch, Balancer and DODO deserve users’ trust.

In November, Pantera partner Paul Veradittakit said that FTX had only a minor impact on the company’s business.

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