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A Bigger Disaster Than FTX

Posted November 16, 2022

Matt Insley

By Matt Insley

A Bigger Disaster Than FTX

It’s difficult to imagine a scenario worse for crypto than what just happened with FTX.

If there was a household name in crypto; it was FTX.

Prior to its sudden and catastrophic downfall, logos for the maligned exchange were printed on the sleeves of umpires at the World Series only a week prior.

Not to mention the Larry David commercials that debuted at the “Crypto Bowl” claiming that FTX was “a safe and easy way to get into crypto”.

For many people, FTX was crypto.

So what could possibly hit harder than the overnight collapse of arguably the most recognizable name in the industry? Who are the only disaster artists more accomplished than the likes of Sam Bankman-Fried?

Central banks.

It’s a common assumption that cryptocurrencies are a somewhat niche technology that is trying to create an independent currency outside of government control.

Few people know that central banks in over 100 countries are in development of - or have even launched - their own digital currencies using the same technology as Bitcoin and Ethereum.

China, Russia, South Korea, South Africa, and Sweden are all currently running pilot programs for their own Central Bank Digital Currencies (CBDCs).

Nigeria launched the eNaira late last year. Nigerians have been slow to adopt the new digital currency, due to unclear messaging about its purpose, use, and how it differs from “risky” independent cryptocurrencies.

Despite the poor results from test cases so far - and a 2022 that has been nothing short of tragic for the crypto industry - the United States is pushing forward in its development of its own CBDC.

It was even recently announced that the New York Fed is launching a 12-week digital currency pilot, along with banking powerhouses Citi, HSBC, Mastercard, and Wells Fargo.

The “bankless money” goal of crypto is quickly becoming anything but.

What do you get when you take the sovereign, private, and unforgeable ideal of cryptocurrencies and put the government in control of it?

The public ledger of the blockchain is now kept privately behind the locked doors of the central bank.

Your money is now conditionally issued and meticulously tracked, whether you like it or not.

Extreme? Perhaps…

But if you consider what was happening behind the scenes at FTX that no one knew about until these past few days, it’s not so far-fetched to say there’s a lot more than meets the eye here when it comes to CBDCs.

The public’s trust in cryptocurrency was damaged greatly by the fraud of Sam Bankman-Fried, and deservedly so. His greed and recklessness as the CEO of FTX led to the losses by many who relied on him and his product.

While this has been well publicized, you may not know that he was very active in efforts and discussions regarding new legislation for the regulation of cryptocurrencies. If his fraud was uncovered only a few weeks later, his influence may have been forever etched in as law.

While SBF may have been run out of town, the legislators he was working with are still hard at work building the future of your money.

The potential for disaster will make FTX look like a hiccup.

Carpe Crypto,

Matt Insley
Publisher, Daily Crypto Hunter

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