Bitcoin bull and crypto investor Cathie Wood thinks the FTX debacle may have done irreparable damage to the crypto space, and she says the incident will likely make many institutional investors stay away for a long time.
Cathie Wood Thinks the Damage Done by FTX Is Severe
The FTX fiasco will go down as one of the biggest embarrassments of the arena. Long considered one of the greatest players in crypto, the company first came to fruition in 2019. It rose through the ranks and was one of the top digital currency trading platforms in the world. Its founder, Sam Bankman-Fried, was labeled a genius by many, though that reputation faded quickly in mid-November of last year.
FTX began experiencing what it referred to as a “liquidity crunch” during that time. It approached Binance as a means of staying afloat and tried to work out a deal where the larger company purchased the smaller one. Sadly, things didn’t quite work out that way, and before long, FTX was filing bankruptcy and its head executive was resigning from his post. It was an ugly sight to watch.
Cathie Wood believes what’s happening with FTX will be the final nail in the coffin. She thinks this event will make several institutional traders turn away for good. She is also confident that this is going to pave the way for hardcore regulation that will make the crypto industry almost unrecognizable.
Wood stated in a recent interview:
In our view, FTX’s insolvency is one of the most damaging events in crypto history. It could delay institutional crypto adoption by years and perhaps give regulators license to take draconian measures… ARK’s conviction in the long-term promise of public blockchains across money, finance, and the internet is not wavering. While the crypto asset market could labor under selling pressure and liquidity crunches in the short term, we believe this crisis is purging bad actors and will enhance the health of the crypto ecosystem with more transparency and decentralization in the longer term.
There already appears to be some truth to what Wood is suggesting. Indeed, there have been huge and newfound calls for crypto regulation following what occurred with FTX. Many politicians and lawmakers claim that what happened with the exchange cannot happen again, and the only way to ensure this is by putting certain laws in place to keep users protected.
One of the people who is unsurprisingly calling for more regulation is democrat Massachusetts senator Elizabeth Warren. She’s even asking Fidelity to go back on its 401K and crypto retirement propositions following the exchange’s collapse.
Congress Needs to Get Its Act Together
She mentioned in a statement:
The implosion of FTX must be a wake-up call for Congress and financial regulators to hold this industry and its executives accountable. Too much of the crypto industry is smoke and mirrors.