Cryptocurrency catastrophe coming, says Wall Street veteran

A prominent short seller on Wall Street has warned that the cryptocurrency sector is likely to replicate the errors that precipitated the demise of FTX.

In 2022, a major trading platform, FTX, declared bankruptcy, precipitating a cryptocurrency crisis.

A combined ยฃ7 billion was lost by thousands of individuals when CEO Sam Bankman-Fried diverted customer deposits to a separate company he owned. This became one of the largest financial frauds in U.S. history and resulted in his conviction a year ago.

Warnings of a Looming Crypto Crisis

However, former hedge fund manager Marc Cohodes has stated that if regulators fail to implement consumer protections, an even greater crisis may be developing.

“In my opinion, we have not learned any lessons. The situation is worse than it was before,” he told.

Bitcoin is in a frenzy. The regulations and rules have not changed. His comments follow US regulators’ approval of exchange-traded funds (ETFs) to simplify cryptocurrency trading.

In the past half-decade, the value of bitcoin has increased by approximately 50%, and it is currently trading at about $42,900.

Additionally, according to Cohodes, there is a reluctance on both sides of the Atlantic to examine how Bankman-Fried constructed the defunct cryptocurrency exchange in an effort to prevent a recurrence. Everyone lacks interest in delving into the logistics of FTX.

The capital that supports cryptocurrencies and their exchanges is substantial and shady. “Money compels people to ignore the situation,” he stated.

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