The history of FTX is that of an impossible balance sheet. A company with $900 million in assets and $9 billion in liabilities. A numerical nonsense that is only possible in an unregulated and probably wild industry. In the fall of this crypto asset trading stock, other nonsenses have been observed such as appropriation of client funds, or assets of dubious origin or value. Even some obviously invented. This does seem like the secret of the pyramid, but not the one that Sherlock Holmes tried to solve in Barry Levinson’s entertaining 1985 film, but a pyramid scheme in the most fraudulent sense. Binance, another star of the crypto firmament, was going to acquire FTX, but a simple process of due diligence (very detailed audit) indicated that buying smoke at the price of gold is not a sensible option.
The thing is, as the world of cryptocurrencies falters, it seems wise to remember that its inspiring principles are long gone. When bitcoin was created, its famous and already mythical supporting document indicated that the currency was born to end a monetary system based on financial institutions, as well as to reduce fraud and protect consumers. And here we are… Bitcoin has lost more than 70% of its value compared to a year ago. The rest of the cryptocurrencies have followed a similar fate, including those considered “stable” (those that try to maintain a peg with a fiat currency).
It is possible that many continue to think that the FTX case is just an exception that tarnishes the rest of the crypto market. However, scam aside, it reveals the difficulty of establishing the value proposition behind much of the offering of these products. Distributed ledger technologies (such as blockchain) support this industry, but those moments of initial euphoria in which it was thought that they could be used for everything, from establishing secure contracts quickly on an international scale (something that is possible) to curing diseases (something, when less, exaggerated). The problem is that if we separate the technology (decentralized ledgers) from the asset (coins, tokens) the second is more visible than a naked king, although some only want to continue seeing royalty and not the rawness of the exposed meat.
For those who maintain the base of the pyramid, while those at the top collapse or sink, keep in mind that the case of FTX is not the only one of resounding failures and investors left in the lurch these days. Others already reported include Hotbit, Hodlnaut, Invictus Capital, Vauld, Voyager and many more. Once the era of negative interest rates is gone, eccentricity puts technology in its place and worthless imagination to back it up. The great opportunity for technology companies to successfully enter the financial business in the short and medium term may be evaporating. For the long term, if they want to enter, they will need value propositions without the possibility of fraud and beyond metaverses and crypto pyramids.
THE COUNTRY of the morning
Wake up with the analysis of the day by Berna González Harbor
RECEIVE IT
Subscribe to continue reading
Read without limits
#secret #pyramid