Since the collapse of FTX, a former crypto exchange, the industry has been in chaos since it began to unravel just days before it declared bankruptcy. A new opinion-ed from Senator Elizabeth Warren, United States revealed A negative attitude towards the industry in regard to the fallout.
Warren wrote that the crypto industry is on a “well-worn path of financial innovation,” which starts with exciting rewards but ends in “crippling losses.” She compared it to subprime mortgages of 2008, penny stocks and credit-default swaps.
The Senator said what happened with FTX should be a “wake-up call” to regulators to enforce laws on the industry.
Some Twitter users agreed with Senator. tweeting that the crypto industry is just “smoke and mirrors” and that Warren has been trying to warn the public all along. Although many people have pointed fingers at Warren, saying regulators don’t understand the industry and incite fear with such comments.
One user suggested a middle ground, stating that regulation is possible for centralized exchanges. These are very different from the technology of decentralized exchanges (DEXs) and crypto.
The centralized exchanges that allow crypto to be traded are far from the crypto technology. Make sure you know the difference, and only regulate centralized crypto exchanges. The risk lies in the central exchanges and not crypto or decentralized financial exchanges/finance. Crypto failed. SBF failed. SEC failed.
— Steve Westhoff (@SteveWesthoff) November 22, 2022
The following day, not referencing the op-ed specifically, the co-founder and CEO of Binance, Changpeng “CZ” Zhao, also tweeted on the topic, saying where there is progress, there is always a failure.
Some, including myself, claim that this will “set up the industry back a few more years.” This is normal, if you think about it. Progress will have its failures. This happened in TradFi regulated in 2008 after 70+ years’ development. The industry will quickly recover and grow stronger.
— CZ Binance (@cz_binance) November 23, 2022
In response to CZ’s tweet, many in the community said that this is the reset crypto needed.
Related: SBF will be punished for mismanaging FTX. Don’t count on it
The FTX scandal has been the subject of concerns from regulators in the United States. Fidelity was urged by U.S. senators to reconsider its Bitcoin (BTC), offerings following the FTX scandal.
On Nov. 16, Warren, along with Senator Richard Durbin, publicized a letter they sent to the former and current CEOs of FTX — Sam Bankman-Fried and John Jay Ray III. 13 people requested documents, lists, or answers to the situation in the letter.
Warren has been a prominent critic of crypto industry in the last year. Previously she has called decentralized finance (DeFi) “dangerous” and has been active in exposing unsustainable practices in the crypto mining scene in the United States.
Her latest op-ed also addresses those topics, along with crypto’s role in money laundering and ransomware attacks.