Key Takeaways
- The collapse of Sam Bankman-Fried’s empire has shocked the crypto industry—and set it back by several years.
- The industry overlooked too many red flags, which allowed Bankman-Fried to rise to prominence.
- The FTX debacle could have been avoided if crypto had stuck to its core tenets: don’t trust, verify; and always self-custody your assets.
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After Do Kwon, Three Arrows Capital, and Alex Mashinsky set the standard for outrageous misbehavior in the crypto space this year, Sam Bankman-Fried’s spectacular fall from grace has recalled one of the Internet’s most popular memes: “Hold my beer.”
This week, it was revealed that SBF, as he’s known in crypto circles, blew a $10 billion hole in the balance sheet of one of the once-largest and most trusted centralized cryptocurrency exchanges, FTX. It will take months until the dust has settled and the full extent of the damage becomes clear.
The lessons this industry will have to (re)learn to unearth itself from this crisis, however, will be the same ones it has always preached. Rule 1: not your keys, not your coins; and Rule 2: don’t trust, verify.
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Almost 14 years after Satoshi Nakamoto published the Bitcoin whitepaper, where they outlined the 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,” crypto…
